The’Kimchi Premium’ in the Bitcoin (BTC) market, which has maintained its highest level in the last two years, has temporarily plunged due to the volume of sales from domestic cryptocurrency exchanges.
At 3 pm on the 7th, the price of bitcoin, which had been in the 78.8 million won range on the cryptocurrency exchange Upbit, started to drop suddenly. Upbit’s bitcoin price continued to decline for an hour and a half after that, and once fell to the 70.4 million won mark per piece.
Based on when the decline was the largest, it fell by about 11%. However, at the same time, the global cryptocurrency exchange Binance’s bitcoin price declined only 1.5%. It means that bitcoin has plunged only in domestic exchanges while global prices have not fallen significantly.
During the 30 minutes of the decline, the trading pattern was also found to be unique. Ki-Young Joo, CEO of CryptoQuant, a cryptocurrency on-chain analysis company, said, “On a 30-minute basis, Upbit’s usual bitcoin trading volume is from 100 to 500, but in this decline, 3,000 sold in an hour and a half.” He explained.
CEO Joo pointed out that the decline is likely to have occurred due to the sale of domestic whales. He said, “Especially from 4pm The cause of the decline was the intensive production of 2000 bitcoins in 30 minutes.“At this time, Upbit traded about 100 bitcoins more than Binance, the number one exchange in global trading volume,” he added.
The background of this unusual phenomenon is attributed to the high’Kimchi Premium’ of domestic cryptocurrency exchanges. Kimchi premium refers to the price difference between buying bitcoin in Korean won in Korean cryptocurrency exchanges and in dollar currency or dollar-based stablecoin in foreign exchanges.
Just before the crash, Upbit’s kimchi premium was over 21%. However, it was found that the premium began to decrease rapidly along with the price drop and decreased to 10% at 4:7 pm, which was the short-term low.
If the kimchi premium rises to a high level again, there is a possibility that mass sales aimed at profits will come out again. The kimchi premium has since risen to 18% as the bitcoin price rebounded, but declined again and remained at the 14% level as of 5:30 pm on the 7th.
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