- Bitcoin briefly traded at $71,800 on South Korean exchanges, $20,000 under global averages.
- South Korea’s crypto market trading volumes outperformed its largest stock market equity index throughout November 2024.
- A “kimchi premium” is the price difference between crypto on South Korean and international exchanges.
A bizarre and unfortunate moment in South Korea’s political history briefly resulted in some sizeable shifts in the crypto markets, which created a $20,000 difference in Bitcoin (BTC) prices between local and global exchanges.
Kimchi Premium Flips
On Dec. 3, South Korea’s President, Yoon Suk Yeol, declared martial law, sending domestic crypto markets into a frenzy.
It sparked record-level trading volumes amounting to 49 trillion won or roughly $35 billion in 24 hours. Leading South Korean exchange Upbit handled some $27 billion in volumes.
The crisis sent South Korea’s unique kimchi premium into a downward spiral as panic selling also gripped the markets.
Bitcoin (BTC) and Ripple (XRP) saw significant outflows. This resulted in BTC trading at a large discount, bringing the kimchi premium down to new lows.
At its peak, Bitcoin was trading as low as $71,800, a $20,000 difference from global exchanges that were trading around $95,000 at the time.
Ethereum (ETH) also traded at a discount of around $2,700 on Upbit, approximately $1,000 lower than the global average.
President Yoon reversed the martial law order after the parliamentary opposition voted 190-0 to overturn the decree.
Arbitrage traders were disappointed to see the kimchi premium cut short, as the prices and the index returned to normal by the early hours of Dec. 4.
Crypto Over Stocks
The news follows recent reports that crypto trading overtook domestic stock trading activity.
According to Bloomberg , daily crypto trading volumes on South Korean exchanges between Nov. 5 and Nov. 28 averaged $9.4 billion, outpacing the country’s flagship equity index, the KOSPI.
This momentum continued into December, and following the declaration of martial law, XRP trading volumes alone were enough to top the KOSPI.
However, despite the nation’s evident appetite for crypto, South Korea’s financial watchdog maintains its ban on the creation of spot and futures BTC-based exchange-traded funds (ETFs).
Furthermore, it has recently doubled down on these restrictions and rejected applications to launch ETFs that would track crypto-linked companies, like Coinbase.
That said, CCN reported in October 2024 that South Korea may be mulling a reversal of that ban.
Ironically, the ban is largely attributed to concerns that domestic stocks and, therefore, the economy could suffer immensely.
However, the surge in crypto activity comes as part of growing distrust in the government, not to mention major corporations like Samsung, which account for significant portions of South Korea’s GDP.
