The price of Bitcoin (BTC) keeps hovering between $ 56,000 and $ 60,000while the call “first Kimchi“It is reaching yearly highs.
The Kimchi premium is formed when the price of Bitcoin trades at a higher price in South Korea than in other major markets like the United States.
In 2017, the Kimchi premium exceeded 20%, causing the price of Bitcoin to hit about $ 24,000 in South Korea while peaking at nearly $ 20,000 in the United States.
Last week, On March 29, this cousin re-emerged, around 6%, which since then it has risen to around 11%.
The Kimchi premium is at 11%, is this bad for the price of Bitcoin?
The last time Cousin Kimchi soared to an all-time high, the market of Bitcoin peaked and saw a violent correction almost immediately after.
Although the premium suggests that the South Korean crypto market is showing signs of overheating, it is not high enough to mark a cap.
Ki Young Ju, CEO of CryptoQuant, said that the premium is worrisome, but Bitcoin’s fundamentals look strong.
However, the difference between now and 2017 is that South Korea only accounts for 1.7% of the global Bitcoin market trading volume.
Thus, Ki explained that even if the South Korean market sees a pullback as a result of the increase in the premium, it wouldn’t have as big an impact as it did in 2017. He pointed:
“$ BTC fundamentals still look good, but the Korean bubble worries me. Shitcoin prices are skyrocketing, and Korean cryptocurrency trading volume has outpaced the national stock market (KOSPI). Even if the bubble breaks. collapses, the impact is unlikely to be significant as it is only 1.7%. “
And most importantly, unlike in 2017, Bitcoin’s current price rally has been led by high-net-worth investors and institutions, as Coinbase’s huge exits demonstrate.
But, one of the reasons many analysts are concerned by the saturated cryptocurrency exchange market in South Korea is that there is significant interest in newly emerging crypto assets.
Instead of Bitcoin and Ether (ETH), the cryptocurrencies with the highest volume on Bithumb, as an example, they are usually new altcoins that have been in existence for a couple of months.
High net worth investors keep buying
Less than a week ago, on March 29, Ki emphasized that taking short positions with Bitcoin is not the ideal trade, as Coinbase Pro is showing great exits.
The outputs of the major exchanges often suggest that institutional investors are buying bitcoin and moving their holdings to self-hosted wallets.
Ki He said at that moment:
“Taking a short position in $ BTC now does not seem like a good idea. It is less likely to drop below $ 52,000 as institutions could have bought $ BTC at that level.”
Since then, Bitcoin price has risen by around 5% and has shown a relatively stable uptrendpossibly because the US dollar has shown signs of weakness again.
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