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Negative Kimchi Premium hints at potential Bitcoin rally

Negative Kimchi Premium hints at potential Bitcoin rally

GrafaGrafa2024/10/24 04:35
By:Isaac Francis

Analysts have noted that the negative Kimchi Premium may indicate an upcoming rally for Bitcoin (CRYPTO:BTC).

Currently, Bitcoin is trading at a lower price in South Korea, despite a rebound in the broader global market.

According to data from the crypto market analysis firm Kaiko, the BTC Kimchi Premium turned negative for the second time since September.

The Kimchi Premium measures the price difference between Bitcoin on South Korean exchanges and global crypto trading platforms.

A positive premium indicates that Bitcoin is more expensive on Korean exchanges, while a negative premium reflects the opposite situation.

This shift in market dynamics can be attributed to stringent capital controls imposed by the South Korean government, which restrict foreign investors from trading on domestic crypto exchanges.

Additionally, the limited supply of cryptocurrencies available on exchanges like Upbit, South Korea's largest, has exacerbated the price disparities.

Upbit offers access to only 215 coins, significantly fewer than many global competitors, leading to heightened demand from investors.

At one point, Bitcoin traded as much as 30% higher on Korean exchanges.

Despite the global recovery in Bitcoin prices driven by optimism surrounding the upcoming U.S. presidential elections, the digital asset is experiencing lower valuations in South Korea.

Market analysts suggest that the negative Kimchi Premium reflects declining investor sentiment in the region.

Kaiko's analysis indicates that this trend could signal a potential rally for Bitcoin, as historical patterns show significant price surges following negative Kimchi Premiums.

Moreover, the Coinbase Premium, which tracks the price difference between Bitcoin on Coinbase Pro and Binance, has also entered negative territory.

This phenomenon often precedes rallies in Bitcoin prices.

With both the Kimchi and Coinbase premiums indicating potential upward movement, BTC appears poised for a price increase.

Additional factors, such as the upcoming U.S. elections and a possible rate cut by the Federal Reserve, may further accelerate this momentum.

At the time of reporting, the Bitcoin price was $67,300.82.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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