South Korean Government Alarmed By Bitcoin’s Kimchi Premium
The Kimchi Premium, the difference that one pays for Bitcoin when traded in South Korea versus the US, is back in the news.
This weekend it was once again at the forefront of the Korea Joongang Daily, one of Seoul’s largest English newspapers.
As Coinbase prepared to be listed on the Nadsdaq stock exchange this week (on April 14th to be exact) and Dunamu, operator of Korea-based crypto exchange Upbit, will be looking closely to see if it can replicate the move on the Seoul Kospi afterwards, all government eyes are once again turning to Bitcoin.
Not legal tender
Just as in 2017-2018, South Korean youngsters are once again heavily invested in cryptocurrencies. The rise of the Kimchi Premium (it rose to a record 20% earlier last week) led to a first official government reaction.
Moon Seung-wook, second vice minister of the Government Policy Coordination Office stating that:
We will keep a close eye out for the market overheating and take stern measures against illegal activities.
He added that:
Cryptocurrency is not legal tender nor are they financial investment products – no one guarantees the value.
Back in 2018, it was the rise of the Kimchi Premium that ultimately led to the downfall of the Bitcoin price, but traders do not believe this time will be the same.
The cryptocurrency boom, suggestive of that of 2017, is pushing the kimchi premium
Explained Han Dae-hoon, an analyst at SK Securities.
He admitted that:
There could be a correction in Korean bitcoin prices as the high kimchi premium will lead to gap-narrowing between global and local price differences. However, a sudden drop in prices is less likely due to high bitcoin demand.
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