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Bitcoin Kimchi Premium Surges as South Korea Grapples with Political Turmoil
Within the past month, the South Korean parliament has impeached its president and is soon expected to do the same to its prime minister. As a direct result, the financial market in South Korea is experiencing significant instability. The Bitcoin Kimchi Premium, a metric illustrating the difference in BTC’s price between local exchanges and international platforms, has surged dramatically.
According to on-chain data from CryptoQuant, the premium has risen by as much as 3%, showcasing that local investors are willing to pay a higher price for the cryptocurrency compared to global users. This trend suggests that the ongoing political turmoil is causing a surge in demand for dollar-denominated assets like Bitcoin, which serves as a haven from the struggling South Korean won.
South Korea’s lawmakers recently filed a motion to impeach Prime Minister Han Duck-soo, following a similar action taken against President Yoon Suk-yeol just two weeks prior. The president was ousted after attempting to impose martial law in the country, suspending civil liberties and reducing the power of government agencies and courts. Bitwise’s Head of Alpha Strategies, Jeff Park, noted that the use of impeachment as a tool for political gain, along with allegations of foreign election interference, serves as a warning sign for democracies worldwide.
It is crucial to note that the Bitcoin Kimchi Premium typically increases in response to capital control policies enforced by South Korean regulators. The country’s stringent regulations have led to higher prices on local exchanges. However, this recent surge is unprecedented and might signal an increase in demand for dollar-pegged assets like Bitcoin as a haven from the depreciating won.
The price gap between the South Korean exchange Upbit and Coinbase has widened to 144,450,000 won ($98,000) per coin, indicating a substantial deviation from the global market average. Historically, such an increase in the premium has been correlated with a bullish streak on local exchanges.
As a result of these events, many investors have sought dollar-denominated assets like Bitcoin as a safe haven against the falling value of the won.
Source: cryptopotato.com
