Bitcoin Buying Options in South Korea is Nealry $1,000 USD Higher than the Global Market
Over the last few days, Bitcoin experienced another significant surge which saw the price shoot up all the way to $13,000 before retracing.
The price surge was another exciting period that reassured many that the possibility of the number one coin hitting its previous all-time high and even surpassing it was quite feasible.
As usual, some of the major altcoins were pulled up by Bitcoin as Ethereum also surged, pushing its Year-To-Date (YTD) gains up to 150%. Since then, both coins have lost significantly in both value and market cap.
Bitcoin is currently at $11,773 with a $209.41 billion market cap while Ethereum is at $301 with a $32.15 billion according to CoinMarketCap at this time.
The Kimchi Premium
Regardless of the general pullback, prices in South Korea are still quite high, almost about $1,000 higher than the prices available in other parts of the world. Bitcoin is somewhere between $11,500 – $11,750 on most of the exchanges available but in South Korea, Bitcoin is as high as $12,500.
Ethereum on the other is available around $300 in most places but South Korea’s UpBit is also a lot higher at $320. In the past 24 hours, the firm has settled about $500 million and doesn’t seem to be slowing down. Bithumb also has Bitcoin around $12,535 at this time with Ethereum at $321.69.
Simply put, the Kimchi premium is a popular occurrence in the industry, where prices in the Korean Won (KRW) from native exchanges, are significantly higher than the obtainable prices in the global market.
With South Korean exchanges, it’s mandatory for a customer to be a citizen. The way to verify this is by making sure every prospective customer makes a physical trip to a bank and submit all the mandatory documents in person before any access to South Korean exchanges can be granted.
About a month ago, a worker at Bithumb’s partner bank complained about the increasing number of potential Bithumb customers keeping him a little too busy at the NH Nonghyup Bank branch in Seoul.
So, Shouldn’t There Be High Arbitrage?
Arbitrage is an opportunity that allows a trader exploit price differences so that buying low at one exchange and selling high at another is very possible.
Ordinarily, this price difference between the South Korean market and the rest of the world makes it seem easy. Looking at the facts alone, it should be fairly easy for a South Korean to simply convert KRW to USD, buy BTC or ETH from Binance for example and then sell off on Upbit. However, this is probably the only way for the trade to happen.
Because of the very strict restrictions placed on opening accounts with South Korean exchanges, traders outside of South Korea would compulsorily have to involve a South Korean if they are to benefit from arbitrage. Generally, the regulations and requirements in the country is the major reason arbitrage can’t work as expected.
This seems like a very easy way to make almost $1,000 for free but it must be considered that because of the market’s volatility, there might be a few other opportunities for arbitrage that could sometimes be more profitable than taking advantage of the Kimchi premium.
Bitcoin’s price is $57,371.49 BTC/USD exchange rate today. The real-time BTC market cap of $1.07 Trillion currently ranks #1 with a chart dominance at 62.37%, daily trading volume of $27.98 Billion and live coin value change of BTC -2.66 in the last 24 hours.