What Causes the Kimchi Premium? South Korean Experts Explain

The “Kimchi Premium” refers to the higher price of cryptocurrencies, particularly Bitcoin, in South Korea compared to the rest of the world. A few factors can cause this phenomenon:

1. Strict Capital Controls: South Korea has strict capital controls which can make it difficult for residents to move money out of the country. Because of these financial restrictions, South Korean investors have limited arbitrage opportunities, leading to higher prices domestically.

2. High Demand: The demand for cryptocurrencies in South Korea is often high.