In this article, We learn about "Kimchi Premium ".Let's Go!
“Kimchi Premium ” is the additional price differential on South Korean cryptocurrency exchanges relative to the global Bitcoin price that is well known in the cryptocurrency world.
It measures how much Koreans pay for Bitcoin.
The spread, the difference between the price of Bitcoin on Korean and non-Korean cryptocurrency exchanges, is known as the “kimchi premium.”
It’s named after kimchi, a popular Korean pickled side dish.
The “pickle premium” first emerged in early 2016, according to University of Calgary researchers.
The paper explains that the reason Bitcoin prices fell during the Asian trading hours was because traders were selling Bitcoin at a higher price on cryptocurrency exchanges in South Korea.
The way it works is that cryptocurrency traders buy large amounts of Bitcoin outside the Korean market (because the price is lower) and then sell it back on the Korean market for a profit. This phenomenon is called “Arbitrage.”
In early 2017, there was no significant difference in Bitcoin prices between South Korea and the rest of the world, but by early 2018, the “kimchi premium” reached more than 50%.
The spread reached its highest in January 2018 at 54.48%.
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