Bitcoin's Kimchi Premium in South Korea has jumped to a four-month high, reflecting robust investor demand in a country mired in political and economic turmoil. The Kimchi Premium, which measures the price difference between Bitcoin on South Korea's Upbit exchange and worldwide exchanges such as Coinbase, has risen to 3-5%.
This increase in demand is a result of South Korea's continuous struggles, which include political instability, a weakening currency, and inflation fears. These factors are driving local investors towards Bitcoin as a store of value.
As analysts say, this high demand might be one of the factors that could help Bitcoin reach $200,000 in Q2 2025. The recent spike in demand for Bitcoins in South Korea occurred amidst a tumultuous political time.
President Yoon Suk Yeol was impeached in December 2024 after failing to declare martial law. These factors have caused tremendous political instability. Furthermore, the acting president was ousted by the parliament then, which has turned this situation into a political muddle.
In this respect, all these happenings tend to weaken the South Korean won, moving 0.35% lower against the U.S. dollar. Because of such uncertainty, Bitcoin is now being viewed along with assets like gold and U.S. dollars by South Korean investors keen to preserve wealth.
Strict currency controls and anti-money laundering regulations in South Korea also contribute to the Kimchi Premium. These make institutional access to crypto exchanges limited, and thus, retail investors rule the roost.
The volumes have outpaced the country's stock markets partly due to a lack of corporate accounts on local exchanges. Stablecoins like Tether and Bitcoin are witnessing similar premiums in South Korea, too, reflecting a broader shift to digital assets.
Analysts believe that Bitcoin could reach as high as $200,000 by mid-2025. Inflation due to the halving in April 2024, reduced supply, and increased interest by institutions are some of the main reasons for this trend. In 2024, investment flows into Bitcoin ETFs have already reached a new record, pushing the price even higher.
One key reason for this bullish observation is the potential U.S. government regulatory clarity on cryptocurrency. They believe that a pro-cryptocurrency administration is more likely to create major positive changes in regulatory reforms and help propel the cryptocurrency market, entailing huge institutional investment.
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