The price of Bitcoin has soared to unprecedented levels in South Korea, crossing the 120 million won ($85,500) mark on local exchanges for the first time, driven by a global cryptocurrency rally and optimism surrounding Donald Trump’s return to the White House.
Historic Highs on Local Exchanges
As of 5 p.m. Tuesday, Bitcoin was trading at 127 million won on Upbit, South Korea’s largest cryptocurrency exchange, with similar values reported on other major platforms like Bithumb. This milestone follows a sharp increase from 95 million won on November 5, just days before Trump’s election victory.
Globally, Bitcoin’s market capitalization reached $1.76 trillion, representing a 10% surge in 24 hours. The figure rivals the combined market cap of the entire Korean stock market, estimated at $1.73 trillion, underscoring the magnitude of this cryptocurrency rally.
The trading volume on South Korea’s top five crypto exchanges surpassed 20 trillion won within 24 hours, exceeding the combined trading volume of the Kospi and Kosdaq, which recorded 17.9 trillion won on Monday.
Shift in the ‘Kimchi Premium’
Unlike previous cryptocurrency rallies in South Korea, which were marked by a “kimchi premium”—higher prices in the local market compared to global averages—the current rally shows a narrowing price gap.
On Tuesday morning, Bitcoin prices in South Korea fell below the global average, creating a rare “reverse kimchi premium” of approximately -1%. However, as trading gained momentum in the afternoon, the premium shifted back into positive territory, rising above 1%.
This discrepancy, while less pronounced than in past rallies, remains significant. During the 2021 bull run, the kimchi premium reached 20%, and in the 2017 rally, it soared to 60%.
Institutional Investors Lead the Charge
Kim Min-seung, head of the research center at Korbit, noted that institutional investors are playing a more significant role in this rally compared to previous ones dominated by retail traders. “A large part of the ongoing rally was led by institutional investors through spot Bitcoin exchange-traded funds,” Kim said.
The surge follows the US Securities and Exchange Commission’s approval of spot Bitcoin ETFs earlier this year, which has attracted substantial international investment. However, this investment outlet remains unavailable to institutional investors in Korea due to regulatory restrictions.
Structural Issues in the Crypto Market
Despite the rally, challenges persist. The price distortion caused by the kimchi premium—or its reverse—is a longstanding issue in Korea’s crypto market. “The distortion is a setback on price discovery, the act of determining a common price for an asset,” Kim explained.
As Bitcoin continues its record-breaking ascent, the structural inefficiencies and regulatory hurdles in Korea’s crypto market highlight the complexities of navigating this booming sector.
