Negative Kimchi Premium Hints at Possible Bitcoin Rally Ahead

Bitcoin is presently trading at a lower value in South Korea, even as the global market witnesses a rebound across exchanges.

As per data from the cryptocurrency market analytics firm Kaiko, the BTC Kimchi Premium has turned negative for the second time since September.

Kimchi Premium Goes Negative

The bitcoin Kimchi Premium refers to the variance in BTC’s price on South Korean exchanges compared to global cryptocurrency trading platforms. When this metric is positive, bitcoin has a higher price on Korean exchanges; conversely, it becomes negative in the other situation.

This market transition can be attributed to stringent capital controls imposed by the South Korean government, restricting foreign investors from trading on the country’s crypto exchanges.

Moreover, the supply of crypto on exchanges is restricted. South Korea’s largest exchange, Upbit, allows access to only 215 coins, which is significantly less than many of its international counterparts.

Due to this limited supply, demand among investors has surged, creating considerable price disparities. At one point, bitcoin was trading at 30% higher prices on Korean exchanges.

Nevertheless, while global bitcoin prices have recovered amid positive sentiment regarding the forthcoming U.S. presidential elections, the digital asset continues to trade at lower values in South Korea.

Is a Bitcoin Rally Approaching?

Market analysts suggest that the Kimchi Premium’s negative shift signifies declining investor sentiment in the Korean market. According to Kaiko, this current negative trend implies that a bitcoin rally could be on the horizon. Historically, significant price increases for bitcoin have followed periods of a negative Kimchi Premium.

Furthermore, another key metric, the Coinbase Premium, which measures the price difference between BTC on Coinbase Pro and Binance, has also shifted recently.

This indicator is now in the negative territory, a trend that often precedes bitcoin price rallies. With both metrics indicating red, it appears BTC’s price is set for a potential surge. Additional elements that could drive such an escalation in the near term include the upcoming U.S. elections and a possible interest rate cut from the Federal Reserve.