Bitcoin Price Hits $$ 72K in South Korea as ‘Kimchi Premium’ Returns

BTC’s price has surpassed $$ 72K in South Korea as the “Kimchi premium” surges, suggesting strong retail interest as the government mulls Bitcoin ETF approval.

Bitcoin (BTC) price briefly hit a new all-time high of 96,734,000 South Korean Won, or $72,504, on March 5 at 3:00 PM UTC on Upbit, South Korea’s largest cryptocurrency exchange.

This coincided with the Bitcoin price hitting a new all-time high above $69,200 on March 5, driven by continued inflows into U.S. Bitcoin ETFs.

Bitcoin’s price rally is primarily driven by institutional demand in the United States, CryptoQuant analyst Ho Chan Chung told Cointelegraph. However, this is not the case in South Korea. Since the country does not have spot Bitcoin ETFs, retail buying is the main driver of Bitcoin’s price rally. The Kimchi premium was first observed in 2016 and highlighted in a 2019 paper by the University of Calgary. According to the researchers, between January 2016 and February 2018, South Korean Bitcoin exchanges witnessed average prices 4.73% higher than exchanges in the United States. During Bitcoin’s bull run in December 2017, South Korean exchanges traded Bitcoin at nearly 50% higher prices than most exchanges worldwide, prompting CoinMarketCap to delist some Korean exchanges due to “extreme divergence in prices from the rest of the world.” During the 2021 bull run, the Kimchi premium peaked at 21.56% on May 19, when Bitcoin was trading above the $36,000 level before reaching its previous all-time high in November 2021.

Some traders are likely trying to profit from these price differences across multiple exchanges, also known as arbitrage.