The price of Ether, the native cryptocurrency of Ethereum, has surged by more than 15 percent overnight, achieving a new all-time high at $1,266.
New All-Time High at $1,266
Four days ago, on January 4, CCN.com previously reported that the price of Ether established a new all-time high at $1,000, surpassing the $1,000 for the first time in its two-year history. The market valuation of Ethereum surpassed a staggering $100 billion, becoming the third cryptocurrency to do so apart from bitcoin and Ripple.
Merely four days later, on January 8, Ether demonstrated another major increase in value, reaching $1,266 across all global exchanges such as Binance and Bittrex.
The latest rally of Ether has been led by the South Korean market and leading cryptocurrency exchanges within it, including Bithumb, Korbit, and Coinone. Within the South Korean global market, the price of Ether surpassed $1,800, demonstrating a $534 premium over the global average price. That is, a 29.6 percent premium over the global average Ether price.
On Bithumb, the Seoul-based cryptocurrency exchange which recently became the second largest trading platform behind Binance, Ethereum is the third most traded cryptocurrency with a $378 million daily trading volume.
No specific event or movement has led to the increase in the price of Ether over the past few days. The transaction volume and developer activity of Ethereum have been on the rise in general, given that the Ethereum network is currently settling more than 1.2 million transactions per day. The rise in the user activity on the Ethereum network could have led to the price increase of Ether in the short-term.
But, in consideration of the abrupt surge in demand from the South Korean market, it is likely that FOMO or fear or missing out drove the recent price surge of Ether, as the South Korean cryptocurrency exchange market is strongly driven by FOMO.
One minor factor that could have also triggered an increase in demand for Ether is the rise of adoption of decentralized applications like CryptoKitties and EtherDelta that have demonstrated the potential of Ethereum in peer-to-peer digital asset trading.
Arbitrage? Think Again
Although the price of cryptocurrencies in the South Korean market is significantly higher than the global average rates, it is not possible for foreigners to take advantage of the arbitrage opportunity in the South Korean market for many reasons:
- Investors need mobile phone numbers to register on South Korean exchanges. South Korean telecoms do not issue (even prepaid sim cards) to individuals without Korean citizenship, residential visa, or work visa.
- Investors need bank accounts. But, banks do not open bank accounts to foreigners without residential or work visa. Banks make it hard for citizens to open accounts as well, due to the governments’ recent crackdown on offshore banking accounts and fraudulent bank accounts.
- The South Korean government has banned foreigners and underaged investors from investing in cryptocurrencies. South Korean cryptocurrency exchanges cannot accept foreigners into their trading platforms.
Conclusively, the prices of cryptocurrencies in the South Korean market are high because of capital controls. The South Korean market is isolated from the global market and foreigners are not allowed in it. Conversely, South Korean traders cannot open accounts overseas without proper paperwork.
Featured image from Shutterstock.
Last modified: March 4, 2021 5:03 PM