Bitcoin’s Kimchi Premium hits 3-year high as Asian markets signal buying opportunity

The Bitcoin Kimchi Premium index has hit a three-year high due to economic factors like the strong U.S. Dollar or global trade war fears.

The Bitcoin Kimchi Premium has spiked to a three-year high of 11.9%. The premium represents the price gap between Bitcoin (BTC) in South Korea and the rest of the world. 

The increase suggests that there is a solid domestic demand for the asset even as prices fall globally.

Even as BTC’s price dropped to $93,900, South Korean traders are paying a significant markup.

At the same time, a high U.S. Dollar Index has added downward pressure on BTC’s price globally amid a massive Trump-tariff sell-off in the Asian markets. 

CryptoQuant CEO Ki Young Ju believes the surge in BTC’s “Kimchi Premium” is not attributed to Korean traders entering to buy the dip; rather, BTC is being converted to USD instead of Korean Won. This suggests that relatively few Koreans are cashing out BTC for their fiat, and similar patterns may be playing out in other markets. 

Asian markets slump

On Feb. 1, Donald Trump imposed tariffs as part of his protectionist measures to protect domestic industries through taxes and restrictions on foreign goods. Trump imposed 25% tariffs on imports from Mexico and Canada and 10% tariffs on Chinese products. Tariffs are set to take effect at 12:01 a.m. EST on Tuesday. 

As per The Tribune, Hong Kong’s Hang Seng index dropped 2.07%, while all the other Asian indices—including Japan’s Nikkei 225 index—tumbled over 2.27%. The KOSPI index of South Korea fell 2.87%, and Taiwan’s weighted index dropped 3.74%. The Indian stock futures are also down with the tariff impact.

To explain the current situation unfolding in the Asian stock market, Daniel Yan wrote on X on Feb. 3 that it was “another typical weak Monday.” The large sell-off reflects Asia’s vulnerability to protectionism policies by the U.S. and the growing concerns about global economic instability, believes Yan. 

Protectionism, in the form of tariffs and quotas, has a long pedigree from the Smoot-Hawley Tariff Act of 1930 that exacerbated the Great Depression. 

The wider market slump coincides with the crypto market crash, with over $2 billion in liquidations on exchanges, the greatest single-day event in history.

However, analysts such as Ansem are positive that the stock and crypto market would revive if Trump’s diplomatic discussions with Canada and Mexico on tariff do not go “horribly wrong“.

Another analyst, Smart Money Asia, pointed out on Jan. 23 that the present executive order by Trump aims to regulate crypto but does not provide traders with plans for a U.S. reserve of BTC, which has been pending for a while. He also sheds light on how the Central Bank of Japan raised rates to 0.5% to combat inflation, its highest in 17 years. According to him, BTC and tech stocks remain a potential powerful hedge against inflation in the Asia market, but he suggests investors practice caution as the BTC bull market matures.