Kimchi premium is a term used in the cryptocurrency community to describe the difference in price between cryptocurrencies traded on South Korean exchanges and those traded on other exchanges around the world.
The term was first coined in early 2017, when the price of Bitcoin on South Korean exchanges was consistently higher than the global average. At its peak in January 2018, the premium reached nearly 30%.
Since then, the premium has fluctuated quite a bit, but has remained relatively high. As of September 2018, the premium was still around 15%.
The reason for the premium is thought to be due to a combination of factors, including the high demand for cryptocurrencies in South Korea, the limited supply of some coins on Korean exchanges, and the Won's relatively strong position against other fiat currencies.
What is premium in crypto? Premium in crypto refers to the value that a cryptocurrency holds above its spot price. This premium is usually calculated by taking the difference between the current market price and the spot price. For example, if Bitcoin is currently trading at $10,000 and its spot price is $9,500, then its premium would be $500.
Premiums can be a useful indicator of market sentiment and can help traders to make decisions about when to buy or sell a particular cryptocurrency. If a cryptocurrency has a high premium, it may be an indication that traders believe it is undervalued and are willing to pay a higher price for it. Conversely, if a cryptocurrency has a low premium, it may be an indication that traders believe it is overvalued and are not willing to pay as much for it.
Premiums can also vary depending on the exchange that a particular cryptocurrency is traded on. For example, a cryptocurrency might have a higher premium on one exchange but a lower premium on another exchange. This is due to the fact that different exchanges can have different levels of liquidity and different prices for the same cryptocurrency.
It is important to note that premiums are not static and can change over time. They can be influenced by a number of factors, such as news events, changes in market sentiment, and even changes in the price of other cryptocurrencies. As such, it is important to keep an eye on the premium of a particular cryptocurrency before making any trading decisions. Is arbitrage legal in Korea? Arbitrage is the simultaneous buying and selling of an asset in order to profit from a price difference between two or more markets.
Arbitrage is legal in Korea.
Why is there a kimchi premium?
The "kimchi premium" refers to the difference in price between bitcoin (or another cryptocurrency) traded on a South Korean exchange and the same cryptocurrency traded on a US exchange. The kimchi premium is often used as a measure of South Korean demand for cryptocurrency.
The kimchi premium began in late 2017, when South Korean exchanges began to trade at a significant premium to US exchanges. The premium peaked in early January 2018, when the price of bitcoin on South Korean exchanges was more than 50% higher than the price on US exchanges.
The kimchi premium has been attributed to a number of factors, including:
- The South Korean government's crackdown on cryptocurrency trading, which led to a shortage of cryptocurrency on South Korean exchanges
- The South Korean won's status as a "haven currency", which makes it attractive to investors looking to park their money in a safe asset
- The popularity of cryptocurrency trading among South Korean investors, who are willing to pay a premium for the convenience of trading on a local exchange
The kimchi premium has since declined, but it remains a significant factor in the price of cryptocurrency traded on South Korean exchanges.
Is Bitcoin prices different in different countries?
Bitcoin prices can vary significantly from one country to another. This is because the cryptocurrency market is a global market and is not bound by any one country's economic or financial regulations. This means that the price of Bitcoin can be influenced by events and news from around the world.
For example, the price of Bitcoin tends to rise when there is political instability in countries like Venezuela or Argentina. This is because people in these countries are looking for a way to protect their money from inflation. Bitcoin is seen as a good investment during these times because it is not subject to the same economic conditions as traditional fiat currencies.
Similarly, the price of Bitcoin tends to rise when there is positive news about the cryptocurrency market. This could be a new exchange opening up, or a new country legalizing Bitcoin. This is because more people are interested in investing in Bitcoin when there is good news about the market.
Of course, the price of Bitcoin can also be influenced by negative news. For example, the price of Bitcoin fell sharply after the Mt. Gox exchange hack in 2014. This was because people lost faith in the security of Bitcoin exchanges after such a major hack.
Overall, the price of Bitcoin can be quite volatile and is influenced by a range of factors. This means that it is important to do your own research before investing in Bitcoin.
What does premium mean in trading? When trading cryptocurrencies, the term "premium" refers to the amount by which the market price of a coin exceeds its face value. For example, if a coin is trading at $1.50, its premium would be $0.50.
The premium can be thought of as a measure of market demand for a coin. A high premium indicates strong demand and a low premium indicates weak demand.
Premiums can also vary depending on the exchange on which a coin is traded. For example, a coin may trade at a higher premium on one exchange than another.
Cryptocurrency investors often seek out coins with high premiums as they offer the potential for greater profits. However, high premiums can also be a sign of market manipulation or pump-and-dump schemes, so it is important to do your own research before investing.