Over the past few days, Kimchi coin – a low-cap altcoin popular among some parts of the South Korean crypto community has been growing rapidly.
Experts say this is largely due to the buzz surrounding the country's new government-initiated plan to launch a won-backed stablecoin.
However, insiders have urged investors to be cautious when looking at the rapid rise of these tokens, noting that the previous surge in the price of Kimchi coin was fleeting.
Kimchi coin: Riding the stablecoin wave?
South Korean media outlet Biz Watch reported that the government’s new won-denominated stablecoin has become a “hot topic” in both the financial and blockchain industries, helping “related” coins gain attention.
The paper notes that while large-cap cryptocurrencies like Bitcoin and Ripple (XRP) are experiencing price stagnation, “only certain domestic coins are showing price spikes.”
For example, MEVerse (MEV) skyrocketed from around 3 KRW to over 20 KRW, as well as fanC (FANC) from 5 KRW to 13 KRW.
During the same period, Wrapped Nine Chronicle Gold (WNCG) increased from about 29 won KRW to 57 won KRW.
Tokens like BORA and Storm X (STMX) also saw price increases of more than 60% on domestic exchanges.
Cryptocurrency Still Popular in South Korea
The TV channel explained that MEV is a coin issued by the gaming and entertainment company Me2On listed on KOSDAQ.
Meanwhile, FanC is released by CELEBe – a Seoul-based startup specializing in mobile applications and social media-related services.
In both cases, more than 99% of the global trading volume of these coins takes place on domestic exchanges like Bithumb and Coinone. Biz Watch wrote:
“Many of these coins have been ignored by investors for a long time. Their trading volumes and market prices have bottomed out. As market interest cools, it becomes harder to find information about the project’s performance and technological capabilities.”
Experts warn
Apywa is a Korean analyst that provides ratings for domestic and international projects. They rated FANC a C-, with 41.48 points out of 100.
In contrast, they rated BTC at an A+ with nearly 95 points. MEV scored 45.83 points (a C), while STMX received a B- and BORA received a B.
Apywa deducts points for these coins indicating relatively low levels of community activity and development activity.
While it is unclear whether the above projects are related to the government’s stablecoin plans, experts believe that the price increase could be due to the relationship with overseas stablecoins such as USDT or USDC.
In other cases, the coins of these projects have some payment and/or settlement functionality that has caught the attention of some traders.
At the time of writing, MEV trading volume on Bithumb far exceeds Ethereum (ETH) and Solana (SOL).
Lessons from the past?
However, experts also expressed concerns about market confusion and the potential for losses for investors. An anonymous securities company employee said:
“With the government’s push to issue won-denominated stablecoins, fintech and blockchain companies are announcing their business plans one after another. They are claiming their involvement and pushing the price up.”
A crypto industry insider added:
“Previously, projects like Paycoin (PCI) skyrocketed when the local government stablecoin was in the news. Then they continuously fell by more than 30% in a few days. Similarly, coins related to the won stablecoin can also fall sharply at any time. Investors should carefully consider the operating status and business ability of the projects. Everyone should invest cautiously.”
