Since TradingView reported a BTC price of $ 57,000 for the US exchange Coinbase and $ 66,000 for the South Korean exchange Bithumb at the time of this writing, the kimchi premium, or the difference between the bitcoin price on western exchanges and South Korean exchanges, is 15 Percent achieved.
With a name derived from the popular South Korean dish, the kimchi premium was first identified in 2016, according to a research report from the University of Calgary. Although the current premium of 15 percent is remarkable, the report marked the spread at 54.48 percent in January 2018.
Although the price range seems lucrative to foreign traders, local regulations prevent foreigners from trading cryptocurrency through a South Korean exchange. In addition, the regulations restrict Korean traders from taking advantage of arbitrage opportunities on international exchanges.
“Institutional frictions prevent arbitrageurs from aligning Bitcoin prices in Korea with the rest of the world,” said the University of Calgary researchers. “Different Bitcoin prices are not just a Korean phenomenon. International Bitcoin price differences can be high and persist for long periods of time.”
That being said, this premium shows an optimistic sentiment for Bitcoin in the South Korean cryptocurrency market. Given the size of the South Korean cryptocurrency market, this high premium for Bitcoin could have an impact on world market prices in the future.