April 27, 2024

• 

[THE INVESTOR] The so-called “Kimchi Premium,” referring to higher cryptocurrency prices in the nation’s overheated trading market, seems to be narrowing as prices of digital currencies are suffering massive falls globally over crackdown worries.

On Jan. 17, cryptocurrencies tumbled globally and the losses were more severe in Korea, the third-largest market that makes up almost 25 percent of the global trading. 

As of 3 p.m., Bitcoin plunged 23 percent over the last 24 hours to be trading at 13.37 million won (US$12,530) at Bithumb, the nation’s largest exchange. Other popular coins also extended their fall, with prices tumbling almost 30 percent.

Bitcoin was trading at about 20 percent premium over global rates. At that time, the US price was US$10,964.

Industry watchers say the Korean trading market is experiencing price adjustments, which means a further reduction in the Korean premium as well.

Until recently, the Korean premium for Bitcoin reached almost 50 percent. But more recently the gap has reduced from 41.3 percent on Jan. 7 to 20 percent on Jan. 17.

“Korean prices are falling more than the global rates. The Kimchi Premium is expected to remain at about 20 percent for some time,” Baek Jeong-sun, an asset manager, said in a news report. “The Korean market is becoming more stabilized.”

He also downplayed the possibility of the Korean government shutting down exchanges despite its warning. 

"After several failed attempts in recent weeks, the government may feel limitations in cooling the market. Instead of drastic measures like exchange disclosure, taxation policies are more likely to be toughened," he said.

By Lee Ji-yoon (jylee@heraldcorp.com)