The price of Bitcoin (BTC) continues to fluctuate between $ 56,000 and $ 60,000, as the so-called “Kimchi prize” reaches maximum annual levels.
The Kimchi premium forms when Bitcoin is traded at a higher price in South Korea compared to other major markets, such as the United States.
In 2017, the Kimchi prize exceeded 20%, causing Bitcoin to trade for around $ 24,000 in South Korea, while reaching almost $ 20,000 in the U.S.
Last week, on March 29, that premium reappeared, fluctuating by 6%, which has since risen to around 11%.
The Kimchi prize is at 11%, is this bad for Bitcoin?
The last time the Kimchi prize hit a historic record, the Bitcoin market peaked and saw a violent correction almost immediately afterwards.
Although the prize suggests that the South Korean cryptocurrency market is showing signs of overheating, it is not high enough to mark a top.
Ki Young Ju, CEO of CryptoQuant, said the prize is worrying, but Bitcoin’s fundamentals look strong.
The difference between this season and 2017, however, is that South Korea accounts for only 1.7% of the trading volume of the global Bitcoin market.
Thus, Ki explained that even if the South Korean market retracted as a result of the premium increase, it would not have as big an impact as in 2017. He noticed:
“The fundamentals of $ BTC still look good, but the Korean bubble is worrying to me. Shitcoin prices are skyrocketing, and Korean crypto trading volume has surpassed the national stock exchange (KOSPI). Even if the bubble goes into collapse, the impact is unlikely to be significant since it is only 1.7% “
Most importantly, unlike 2017, the ongoing Bitcoin rally was led by institutions and high net worth investors, as demonstrated by Coinbase’s huge outflows.
But one reason many analysts are concerned about the overcrowded market for cryptocurrenia in South Korea is that there is significant interest in emerging cryptographic assets.
Instead of Bitcoin and Ether (ETH), the cryptocurrencies with the highest volume on Bithumb, for example, are often new altcoins that have been around for a few months.
High net worth investors continue to buy
Less than a week ago, on March 29, Ki emphasized that short selling Bitcoin is not the ideal deal, as Coinbase Pro is having big outlets.
Outflows from major exchanges generally suggest that institutional investors are buying Bitcoin and transferring their assets to self-hosted portfolios.
Ki said at the time:
“Playing short on $ BTC now doesn’t seem like a good idea. It is less likely to fall below 52k, as institutions may have bought $ BTC at that level.”
Since then, Bitcoin has risen about 5% and has had a relatively stable upward trend, possibly due to the U.S. dollar showing renewed signs of weakness.