Summary:
Cryptocurrencies traded at big discounts in South Korea but quickly recovered.
Bitcoin dropped to $71,800 on Upbit while trading at $95,500 on Coinbase.
Ethereum fell to $2,700 before rebounding to $3,700.
Korea Premium Index fell to -14.67, indicating lower selling prices by retail investors.
Analyst Ki Young Ju questioned the logic behind selling Bitcoin during political instability.
Market Turmoil in South Korea
Cryptocurrencies experienced significant price discounts in the South Korean market on Tuesday, but quickly recovered amid escalating political drama in the region.
What Happened
Major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) saw their values sharply decline on Upbit, South Korea's leading cryptocurrency exchange. Bitcoin plummeted to as low as $71,800 following President Yoon Suk Yeol's imposition of martial law. In contrast, the cryptocurrency was trading around $95,500 on Coinbase, the largest U.S. exchange.
Similarly, Ethereum dropped to $2,700 on Upbit while it was trading over $3,600 on Coinbase. The Korea Premium Index, which measures the price difference between Korean exchanges and others, fell to -14.67, indicating that retail investors were selling at lower prices than average market rates.
A Short-lived Arbitrage Opportunity
What should have been a lucrative arbitrage opportunity quickly vanished as Bitcoin rebounded to $95,424 on Upbit, closely aligning with the global price of $95,857. Ethereum also saw a recovery, reaching $3,700. This turnaround followed President Yoon's decision to retract the martial law declaration after facing parliamentary pushback.
Why It Matters
Noted analyst and CryptoQuant CEO Ki Young Ju expressed confusion regarding the sell-off during political instability, questioning why investors who bought Bitcoin were now selling it. He highlighted the kimchi premium, a phenomenon where cryptocurrencies on Korean exchanges typically trade at a premium of up to 30% above global prices. This is in stark contrast to the current situation.
Historical Context
The kimchi premium was notably exploited by Sam Bankman-Fried, founder of Alameda Research and the now-defunct FTX exchange, who reportedly profited immensely during its peak.
Current Price Action
As of the latest updates, Bitcoin was trading at $95,897.38, down 0.29% in the past 24 hours, according to data from Benzinga Pro.
Image via Shutterstock
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