South Korean financial regulators are looking into the massive amount of foreign remittances of cash that came from crypto exchanges.
Kimchi Premium News
The “Kimchi premium” is a term used in the cryptocurrency industry to describe when the price of a given digital asset on a South Korean exchange is higher than the price of the same asset on other exchanges. The phenomenon is most commonly seen with Bitcoin (BTC) and Ethereum (ETH) and is often attributed to their high demand in the region. The term is a play on the Korean dish kimchi, which is typically made with cabbage fermented in a spicy chili sauce. Just as kimchi is a popular dish in Korea, so too are digital assets like Bitcoin and Ethereum.
The Kimchi premium is not always present, and its existence is often dependent on market conditions. For example, the premium disappeared in early 2018 when the South Korean government announced it was planning to crack down on cryptocurrency trading. However, the premium has since returned as investor confidence in the industry has increased. Some traders try to profit by trading the price differences between various exchanges, a practice known as arbitrage. Arbitrage has historically been used by currency traders seeking mismatches in exchange rates to identify arbitrage possibilities. However, the Kimchi premium has made it more difficult to profit from arbitrage opportunities in the cryptocurrency market since it’s often driven by factors specific to the South Korean market, such as regulations and news.
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