The increasing interest in Bitcoin results in a big difference between supply and demand at different fairs. For example, we see that the price of the crypto currency in South Korea is relatively much higher than the average global spot price, up to more than 5%.
Bitcoin in South Korea
A higher price at a certain fair is also called a ‚premium‘. In the past, the most notorious of these premiums has returned, the so-called „Kimchi premium“. This is a phenomenon that occurs on Korean stock exchanges.
The Kimchi Premium is named after a popular Korean dish. It refers to a higher price of bitcoin on Korean stock exchanges in times of high volatility. Similar differences were also present in 2018, up to sometimes a premium of 54%.
According to data from CryptoQuant, the premium is currently still a lot lower than it was then. Nevertheless, a Korean currently quickly pays 5.5% more for one bitcoin.
This premium is not due to the fact that Korean traders want to pay higher prices for Bitcoin.
Research from 2019 suggests that the difference is due to the fact that the trader Bitcoin with the Korean Won in Korea is larger compared to the trader with the dollar. As a result, the difference in the exchange rate between the Won and the dollar is also found in this metric.
In addition, the Korean market is relatively isolated from the global stock exchanges. Usually, premiums are offset by arbitrage trading. However, strict capital controls in Korea prevent this from happening now. Decrypt writes:
„The Korean Won is a restricted currency, which limits the possibility of easy conversion for international payments. Arbitration cannot be completed without the possibility of conversion“.JONATHAN LEONG, FOUNDER OF BTSE
Anyway, a premium shows that the interest among investors is increasing.
Premium for Grayscale
However, this type of situation does not only occur between American and Korean stock exchanges. We also see a premium within America.
In this case it is the premium between the spot price on for example Coinbase and the Grayscale Bitcoin Trust (GBTC). Due to the enormous institutional interest, the price of the shares of this fund is rising faster than the spot price of Bitcoin.
At its peak, there was a premium of 35% (!), a figure that recently dropped to 17%.
Marc van der Chijs already explained in the Hup Bitcoin Era review podcast: With the advent of an Exchange Traded Fund (ETF), this premium will slowly disappear, because people will then have an index to trade with instead of a basket of shares.
Extra expensive in Nigeria
On Bitcoin Price Map you can also see that the price in the local Nigerian stock exchange is much higher than average. At the time of writing, this premium is equal to 23%. Also in Peru and Chile you pay a little more on average: 4% and 3.10% respectively.