Premiums of an infamous bitcoin (BTC) trade popularized by Sam Bankman-Fried have popped back to significant levels amid a market bloodbath caused by rising U.S. tariffs, a market sign that some consider bearish in the short term.
The premiums of an infamous bitcoin (BTC) trade popularized by Sam Bankman-Fried have returned to substantial levels amidst a market bloodbath triggered by rising U.S. tariffs, a market indicator that some believe to be bearish in the short term.
The Kimchi premium, which denotes the variance in bitcoin prices on Korean exchanges compared to global exchanges, rose just over 10% as of Asian morning hours Monday as BTC slid by 6% in the past 24 hours.
This arbitrage involves purchasing bitcoin on a global exchange and selling it on a Korean exchange to generate a riskless profit in Korean won. While claiming these gains is hindered by South Korea's stringent capital controls, the premium is often used in conjunction with other factors to gauge market sentiment.
Trading volumes on Korean exchanges Bithumb and Upbit have dropped significantly over the past week, indicating a decrease in retail trading activity. At the same time, balances of dollar-margined stablecoin tether have declined on both exchanges with instances of withdrawal delays.
“It seems that most retail investors are either already fully invested in spot or have withdrawn their funds to engage in DEX activities,” Seoul-based DNTV Research analyst Bradley Park told CoinDesk in a Telegram message.
“In this situation, the kimchi premium doesn’t represent retail investors’ overbuying; rather, it appears to have risen as a passive response to the uncertainty of a strong dollar environment,” Park added.
“The kimchi premium can surge excessively when trading volume increases, but it can also help defend prices when the asset prices on overseas exchanges drop significantly,” Park said, adding that this was likely “not a positive sign” in the short-term for bitcoin.
Disclaimer:info@kdj.com
The information provided is not trading advice. kdj.com does not assume any responsibility for any investments made based on the information provided in this article. Cryptocurrencies are highly volatile and it is highly recommended that you invest with caution after thorough research！
If you believe that the content used on this website infringes your copyright, please contact us immediately (info@kdj.com) and we will delete it promptly.
