Kimchi Premium Hits Highest Since September... Investor Sentiment Flocks to Bitcoin

NFT-related altcoin Omicron takes a direct hit... Stagnant domestic stock market also affected
Volatility inevitable if US interest rates rise

[Asia Economy Reporter Gong Byung-sun] As the new COVID-19 variant virus 'Omicron' spreads worldwide, domestic investors are flocking to Bitcoin, the representative cryptocurrency. The Kimchi premium, which refers to the price difference of Bitcoin between domestic and overseas cryptocurrency exchanges, has reached its highest level since last September.

According to cryptocurrency data site CrypPrice on the 29th, the Kimchi premium recorded 8.08% that day. This means that when purchasing Bitcoin through domestic cryptocurrency exchanges, investors had to pay about 8% more than overseas prices, indicating strong demand from domestic investors. This is the highest level since September 7 (9.44%).

On the 1st of this month, Bitcoin’s Kimchi premium was only 0.99%, but it began to rise as the volatility of other altcoins increased. Altcoins related to non-fungible tokens (NFTs), which had recently driven the cryptocurrency market boom, were hit hard by Omicron. The cryptocurrency ‘Bora,’ which rose to 1,980 won on the 25th, fell to 1,355 won the day before, a sharp drop of about 32% in three days. PlayDapp also dropped 40.18% in five days. Bitcoin fell about 4.99% during this period but was relatively stable compared to altcoins.

The sluggish domestic stock market also contributed significantly to funds flowing into cryptocurrencies. Since the beginning of this month, the KOSPI has remained in a sideways range between 2,900 and 3,000 points. As investor sentiment cools, concerns about a correction are rising. On the 25th, the KOSPI’s trading volume was 9.4011 trillion won, falling below 10 trillion won. On the same day, the domestic cryptocurrency exchange Upbit recorded a 24-hour trading volume of $14.38112 billion (approximately 17.1854 trillion won).

However, Bitcoin itself can also fluctuate. The growing Bitcoin Kimchi premium signals signs of overheating. In fact, just before Bitcoin plunged from 81.99 million won to the 54 million won range on April 14, the Kimchi premium reached about 14.03%.

The possibility of a U.S. interest rate hike is also a factor to watch. Bitcoin surged last March when COVID-19 spread and governments worldwide lowered interest rates to inject liquidity. Professor Hong Ki-hoon of Hongik University’s Department of Business Administration warned, "The U.S. interest rate hike will trigger the bursting of bubbles in all assets, including Bitcoin. If investors perceive it not as a simple investment asset but as a last opportunity and invest, they could suffer significant losses when the U.S. raises interest rates."

This content was produced with the assistance of AI translation services.