Bitcoin Kimchi Premium Rises As South Korea Struggles With Political Turmoil

The ongoing political turmoil in South Korea has had a ripple effect on the country’s financial market. The South Korean won has fallen to its lowest value against the US dollar since March 2009.

This devaluation is reflected in the Bitcoin Kimchi Premium, a metric that shows the gap between the price of BTC in South Korea and other countries. On-chain data from CryptoQuant reveals that local investors spend up to 3% more to buy BTC than global crypto users.

Political problems of South Korea

Jeff Park, Bitwise’s Head of Alpha Strategies, shared insights on the current political issues in South Korea. He explained that the country’s lawmakers recently tabled a motion to impeach Prime Minister and Acting President Han Duck-soo. This comes just two weeks after parliament ousted President Yoon Suk-yeol, who has ruled the Asian nation since May 2022.

The president’s ouster came after he tried to implement martial law in the country to protect it from “anti-state” forces. Enforcing martial law involves conferring authority from civilians to the military. This rule suspends the civil right to freedom of press and assembly and reduces the power of government agencies and courts.

Highlighting how the ongoing political turmoil is affecting global democracies, the Bitwise executive wrote:

“The use of impeachment as a political tool, combined with allegations of foreign election interference, underscores the fragility of democracy in the face of disinformation. This is not just a Korean story; it is a warning to democracies everywhere the world”.

Impact on Bitcoin Kimchi Premium

News of the impeachment of South Korea’s acting president triggered a sharp devaluation of the won.

Crypto asset prices tend to be higher on South Korean exchanges than on foreign trading platforms, mainly due to the country’s regulators’ strict capital control policies. At the time of writing, BTC was 144,450,000 won ($98,000) on South Korean exchange Upbit, compared to $95,100 on US exchange Coinbase.

Previous reports show that a rise in Bitcoin Kimchi Premium often indicates a bullish streak in South Korean crypto exchanges.

Despite the widening price gap, local investors have been quick to flock to dollar-denominated assets like BTC as a refuge from the won fight.

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