South Korea's Upbit Bitcoin hits US$72,500, Kimchi premium exceeds 10%! Can you make arbitrage by moving bricks?

Bitcoin topped $69,000 this week, breaking the all-time high set in November 2021. At the same time, the Bitcoin quotation on Upbit, South Korea's largest cryptocurrency exchange, once reached 96,734,000 won (approximately US$72,504), a premium of nearly US$3,000.

Kimchi premium reaches 10%

According to data shared by Crypto Quant founder Ki Young Ju, South Korea’s Bitcoin premium index has reached 10%, the highest level in the past two years. This shows that Korean retail investors are re-entering the market.

## In addition, Crypto Quant analyst Ho Chan Chung also told Cointelgraph that the rise in Bitcoin prices is mainly driven by institutional demand in the United States, but in South Korea, the situation is very different because There are no Bitcoin spot ETFs available for purchase in South Korea, so it is mainly retail investors’ purchasing demand that drives Bitcoin’s rise.

Can I use the kimchi premium to make arbitrage?

The kimchi premium phenomenon was first discovered in 2016 and attracted people's attention. In 2019, the University of Calgary in Canada released a study in which researchers found that between January 2016 and February 2018, Korean Bitcoin trading quotes were 4.73% higher on average than those on U.S. exchanges.

In the 2021 bull market, Korean kimchi reached its peak on May 19, with a premium of as high as 21.56%. At the time, Bitcoin was trading at over $36,000 and hit a peak of nearly $69,000 in November of that year.

However, at present, as local regulations basically prohibit foreign investors from trading on Korean exchanges, Korean investors who purchase large amounts of cryptocurrencies from foreign exchange for arbitrage may also be subject to the country’s Foreign Exchange Transaction Act. receive punishment. Therefore, if you want to make a profit by moving bricks, you may need to bear legal risks.

South Korea opens spot ETF listing or eliminates premium?

It is worth noting that South Korean financial regulators are considering following the footsteps of the United States and opening up the listing of Bitcoin spot ETFs, which may eventually eliminate the kimchi premium. Lee Bo-hyun, director of the South Korean Financial Supervisory Service, said on the 5th that in South Korean supervision Within the authorities, he is one of those who has a positive attitude toward virtual assets, but others are cautious and internal discussions are still ongoing.

Previously, South Korea’s Financial Services Commission (FSC) announced in January that it prohibited domestic brokers from acting as agents for overseas listed Bitcoin spot ETFs, forcing major Korean brokers such as Samsung Securities to suspend trading. However, the South Korea Financial Services Commission still allows overseas Bitcoin futures ETF continues to trade.

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