The difference in the rate
At the time of writing, the Bitcoin price at Coinbase is $ 24,495 and you pay $ 24,498 at Binance. At the South Korean Upbit, for example, you currently only pay $ 24,410 for a Bitcoin, while at Bithumb the price is even below 24,400.
According to Doo Wan Nam, the Chief Operating Officer of Node Validator and Stablecoin, the change of the Kimchi premium from a premium to a discount means there is less interest from the South Korean retail audience.
“Overall it means a drop in interest from the South Korean retail audience, which ironically is always a good time to buy because you know you can always sell your Bitcoin later to South Korean gamblers for a premium of 20%. percent if they feel FOMO,” said Doo Wan Nam.
Take advantage of the differences
Some traders try to take advantage of the different prices at the trading platforms, which is what we call arbitrage trading in technical jargon. In the past, the size of the Kimchi premium was mainly linked to the news. There were mainly dips when, for example, there was bad news about South Korean trading platforms.
For example, the premium disappeared completely at the beginning of 2018, after the South Korean government announced plans to tackle the industry. A paper from 2019 from the University of Calgary revealed that the Kimchi premium first emerged in 2016.
Between January 2016 and February 2018, South Koreans paid an average of 4.73 percent more for Bitcoin than Americans, according to the researchers. That’s a pretty big difference for a global financial asset.