December was a fiery month for the cryptocurrency sector. South Korea’s Bitcoin Premium Index, a thermometer of the nation’s purchasing power, has soared to levels reminiscent of its November 2021 highs. This sudden heat wave has analysts sweating and unsure whether this is a harbinger of strength or a prelude to a severe correction.
Bitcoin ‘Kimchi Premium’ – Korean FOMO excitement
Market watcher CryptoQuant points to an interesting trend: “Korean premium overheating.” They whispered that this phenomenon could be a sign of a price peak due to a powerful mix of FOMO-driven excitement and Korean cash pouring into digital shores.
Korean premium is overheating.
“The Korean Premium Index is often used to identify peak prices because Koreans 1) have immediate access to cash to purchase coins on exchanges and 2) have a high level of FOMO.”
by @Signal_QuantLink 👇https://t.co/qNyrcdtenV
— CryptoQuant.com (@cryptoQuant_com) December 26, 2023
Currently, Bitcoin is just over the $42,000 level and is hurting 1.33% in the last 24 hours. But in Korea, the story is different. The premium index responds positively, revealing retail investors’ willingness to pay a premium for Bitcoin corrections. This upward trend suggests a desire for higher prices for kimchi.
BTC price action in the last 24-hours. Source: Coingecko
The ‘Kimchi Premium’, which is the price gap between Korea and global exchanges, is not unfamiliar in the cryptocurrency scene. Think of Bitcoin in a fiery gochujang robe, offered at a premium by Korean traders eager to sample the digital delicacy.
On Upbit, the kingpin of Korean exchanges, Bitcoin emerged as the third most traded asset over the past day, with the BTC/KRW pair accounting for 7% of total volume. Bithumb, another kimchi enthusiast, became even hotter, accounting for 48% of the total transaction amount.
Bitcoin slightly below the $43K level today. Chart: TradingView.com
South Korea’s cryptocurrency craze: technology, openness, caution
Why the Korean craze? Legal Bitcoin ownership, a tech-savvy public that loves digital thrills, and perhaps a bit of a national gambling ethos seem to be the secret ingredients. This open-mindedness has transformed the country into fertile ground for cryptocurrency adoption, with Bitcoin taking the top spot on the digital menu.
However, you need to be careful amid the kimchi-scented happiness. Like the capricious plot of a K-drama, the premium index can change direction in an instant. If Korea’s purchasing power plummets or global markets correct, premiums could plummet, leaving investors with heartburn instead of profits.
Cryptocurrency trading has established itself in Korea. The country’s government has decriminalized Bitcoin ownership and trading on regulated exchanges. One of the reasons for the country’s early adoption of digital currencies and general openness to new ideas is its fascination with technology and gaming.
The Bitcoin scene in Korea is truly spectacular and offers a glimpse into the future of global cryptocurrency adoption. Whether that’s a prelude to the bullshit or a spicy fix is yet to be seen. But one thing is certain. The Korean market is adding a unique flavor to the global cryptocurrency industry, and if you pay close attention to the price tag, it’s worth savoring.
Featured image from Shutterstock