Study reveals that South Korea's Kimchi premium” is strongly connected to international transfers to China-
Study reveals that South Korea's Kimchi premium” is strongly connected to international transfers to China-
A newly published study published in December 2022 shows that South Korea's "Kimchi premium", the deviation of the cryptocurrency ratings on Korean stock exchanges compared to western trading platforms, is strongly connected to China.
Investigation of foreign transfers to China reveals strong correlation with South Korea's "Kimchi premium"
according to a Learn under the direction of Jangyoun Lee, an assistant At the Incheon National University, and Taehe Oh from the Bank of Korea, South Korea's Kimchi premium seems to be significantly correlated with an inflow of foreign transfers to China. The researchers find that the first instance of the Kimchi premium in South Korea took place in 2016 when there was a high demand for Bitcoin with Korean investors, but only a limited offer Bitcoin . The Kimchi premium essentially refers to the fact that the price of Bitcoin and other cryptocurrency plants in South Korea is significantly higher than on western stock exchanges.
The researchers stated that between January 2016 and May 2021, the team analyzed financial data on foreign transfers to China of around 1,211 foreign exchange transactions. Before January 2018, during the Bitcoin bull run in 2017, the researchers stated that the premium reached its peak almost 55 %before declining. However, the Kimchi premium dipped again during the again on , And the authors of the study found that on May 19, 2021, the premium was more than 20 % higher than the price on western cryptocurrency trading platforms. The authors of the research work add:
Our results indicate that Chinese Arbitrageure use Korean financial institutions as Bitcoin deposit centers and convert virtual currencies into Fiat currencies when the Kimchi premium was continued.
The authors of the study assume that a significant part of the premiums and the increase in foreign arbitrageurs are related to events in China. For example, the paper describes that while China prohibited cryptocurrencies, South Korea and countries like the United States decided to regulate the industry. "Therefore, Chinese arbitrageurs could only pay their cryptocurrencies outside the country," said the producers of the research paper "Kimchi Premium".
"This paper shows that the Kimchi premium is positively related to the increase in transfers to China, after the important drivers that have a direct impact on how stocks, bonds, foreign exchange and real economy have been controlled," claim the authors of the paper. The authors continue to assume that the results illustrate the complexity of the global cryptocurrency market and that international standards and common regulations are necessary to protect investors. South Korea was a "goal of cryptocurrency arbitrage dealers who take advantage of excess demand," emphasizes the newspaper.
South Korean Bitcoin premiums in 2023
The Kimchi premium continues to this day, and at 9:00 p.m. Eastern Time on January 9, 2023 is the price of Bitcoin ( Bitcoin ) on Upbit and Bithumb, two of the most important cryptocurrency exchanges in South Korea, was around 17,427 to $ 5,437 per unit. However, at the same time, using the global average on Coinmarketcap.com, the price of bitcoin Bitcoin $ 17.205 per piece per piece Coin. This means that arbitrage dealers swap bitcoin can achieve a bonus of around 1.35 % on South Korean exchanges, and there is also a difference in the Prices from Ethereum ( ETH ) on western stock exchanges compared to its value on South Korean Exchange.
High premiums for bitcoin also happened regularly on the Japanese cryptocurrency market market. Premiums on Bitcoin were also observed in countries such as Thailand, Hong Kong, Brazil, Malaysia, the Philippines and Chile. In addition, arbitrage options were slightly available before personal trading on the trading platform Localbitcoins was prohibited. While the trend has decreased in the region depending on the country and Bitcoin liquidity, foreign arbitrageurs can still benefit from the exchange of funds between two locations.
What do you think of the study on the South Korean Kimchi premiums and the results that indicate that they are related to Chinese transfers? Let us know your opinion on this topic in the comment area below.
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