Price Rises on Expectations of Bitcoin Spot ETF Approval
Kimchi Premium Indicator Falls as Price Increases
As Bitcoin prices rise on expectations of the launch of a Bitcoin spot exchange-traded fund (ETF), the Kimchi premium indicator is showing a downward trend. This phenomenon is interpreted as the expectation for a spot ETF being much stronger overseas than in Korea.
According to cryptocurrency data firm CryptoQuant on the 30th, the Bitcoin Kimchi premium indicator was recorded at -0.03 as of the 29th. This indicator represents the percentage difference in Bitcoin prices between domestic and overseas exchanges. The negative value indicates that the domestic Bitcoin price is lower than overseas prices, meaning Korean investors' buying sentiment is weak.
So far, the Kimchi premium indicator has recorded positive values more often than negative ones. On July 9, it rose to as high as 6.17, when Bitcoin prices were around $28,000. Since then, the Bitcoin Kimchi premium indicator fluctuated between 0 and 3. On the 12th of this month, it also recorded a positive value of 2.50. However, as Bitcoin prices, which had been maintaining the $26,000 range, rose, the Kimchi premium indicator declined, falling to -1.01 on the 23rd. With the increasing likelihood of approval for a Bitcoin spot ETF, Bitcoin prices have risen more than 27% over the past month. Overseas investors have actively responded to this price increase by trading Bitcoin vigorously, while domestic investors' Bitcoin investments have relatively decreased, resulting in this trend in the Kimchi premium indicator.
Looking at the proportion of Korean won in total Bitcoin trading volume also reveals that Koreans' enthusiasm for Bitcoin is gradually cooling. According to Coinhills, a cryptocurrency analysis platform, the 'Bitcoin trading volume by national currency' on the 30th showed the Korean won accounted for 6.77%, the second highest after the US dollar (84.82%). This was followed by the Japanese yen (4.08%) and the euro (1.87%). The won's share has been declining this month, down 0.35 percentage points from 7.12% recorded on the 12th.
Examining the trading volume trends of Upbit, the largest cryptocurrency exchange in Korea, domestic investors' trading volume is decreasing. According to data from CoinGecko, a cryptocurrency market data site, Upbit's trading volume dropped sharply from $4.23011 billion (approximately 5.717 trillion KRW) on the 25th to $2.064 billion (approximately 2.7116 trillion KRW) as of the 30th. Similarly, Bithumb, which holds the second largest market share, saw its trading volume decrease from $837.1 million (approximately 1.086 trillion KRW) to $364.54 million (approximately 492.9 billion KRW) during the same period.
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