Bitcoin Price Soars Amid Kimchi Premium & Trade Tariff Concerns

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  • Fears of a global trade war drove South Korea’s Bitcoin Kimchi premium to a 3-year high of 11.9%.
  • Analysts found long-term holding patterns and unoccupied Bitcoin blocks. This could be a possible indicator of upcoming supply shortages and market spikes.

On Monday, South Korea’s Bitcoin Kimchi Premium dramatically increased, hitting a three-year high of 12%. Since April 14, 2024, the premium, the difference between South Korean exchanges and other markets, has increased to its maximum.

The Kimchi premium had dropped somewhat to 9.70% as of press time. However, the Bitcoin price returned from a significant slump and reclaimed the $100,000 barrier.

The price of Bitcoin was $98,909 at the time of writing. The token was up more than 2.90% in the previous 24 hours.

Kimchi Premium Surges Following Trump’s Trade Tariff Announcements

A sudden rise in the Kimchi premium comes after President Donald Trump declared import tariffs on Mexico, Canada, and China. This announcement sparked market worries about an extended trade dispute together with the inflationary effects of the U.S economy.

Source: X

Data from CryptoQuant showed that local traders in South Korea paid up to 12% higher than global rates. At the same time, the Bitcoin price fell to $95K on international exchanges.

South Korean cryptocurrency traders experience higher prices because of various market structures in their country. South Korea’s lack of a future trading market will allow it to avoid the negative implications of global market liquidations. This occurs when prices fall.

Most retail investors participating in South Korea’s market contribute to unique trading behavior compared to international exchange sessions.

CryptoQuant CEO Ki Young Ju observes that this premium rate differs from previous peaks. Recent price developments have shown that traders have avoided buying Bitcoin with Korean currency. That’s because they convert it directly to USD instead of Korean won.

The trading pattern indicated South Korean cryptocurrency investors modify their local exchange strategies. This potentially shaped market conditions in their country.

Regulatory Barriers Keep Foreign Investors Out of Korean Exchanges

The regulatory restrictions for cryptocurrency capital in South Korea create a limited trading environment. This drives the premium rate of crypto assets known as the kimchi premium.

The laws implemented for capital controls block outside investors’ offshore exchange participation. At the same time, they restrict Korean traders’ capacity for significant arbitrage operations on international platforms.

Attempting to profit from the premium by purchasing significant quantities of Bitcoin on overseas exchanges may result in capital control penalties. Political events from the recent period have introduced new uncertainties into the system.

The severe import tariffs that U.S. President Donald Trump announced against Canada, Mexico, and China have escalated market unpredictability.

This international trade tension coincided with a unique market signal. The signal is that Bitcoin crypto blocks remained notably empty, reaching levels not seen since late 2022.

Kimchi Premium and Bitcoin Price Spikes Mirror 2022 Market Patterns

Historically, the premium serves as a local market sentiment tool, yet recent conditions are dissimilar to previous cycles. Past premium spikes often coincided with aggressive buying during price increases.

On the other hand, the current situation showed resilience in South Korean prices even during global market corrections.

Source: X

The market becomes intriguing when Bitcoin blocks remain empty alongside persistent price spikes. The current Bitcoin crypto on-chain activity mirrored its 2022 market bottom phase.

This led to a Bitcoin price surge of 500%, so traders analyzed this pattern as a potential market indicator. The reduced blockchain activity indicated that holders kept their coins for the long term instead of frequent trading. This minimized available assets on the market.

Disclaimer

This article is for informational purposes only and provides no financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading. Please do your research before making any financial decisions.

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