What is the Kimchi Premium?
The Kimchi Premium refers to the price gap between cryptocurrency prices on South Korean exchanges (like Upbit, Bithumb) and international exchanges (like Binance, Coinbase). The name comes from kimchi, a traditional Korean dish.
How It's Calculated
Kimchi Premium = ((Korean Price - Global Price) / Global Price) × 100%
For example:
- BTC on Upbit: $95,000 (converted from KRW)
- BTC on Binance: $91,000
- Kimchi Premium: +4.4%
Why It Exists
Several factors contribute to the premium:
- Capital controls: South Korea restricts large capital flows, making arbitrage difficult
- Limited crypto exchanges: Fewer fiat on/off ramps
- High retail demand: Strong interest from Korean retail investors
- KRW exchange rate: Won volatility affects USD-equivalent prices
Historical Context
| Period | Premium | Market Condition |
|---|---|---|
| 2017 Bull | Up to +50% | Peak retail FOMO |
| 2018 Bear | Near 0% | Interest faded |
| 2021 Bull | +10-20% | Renewed enthusiasm |
| Normal | 0-3% | Typical range |
Why It Matters
- High premium (5%+): Strong local demand, potential overheating
- Negative premium: Unusual, may indicate local selling pressure
- Arbitrage impossible: Premium persists due to capital controls
In Our Reports
We calculate the premium using Upbit (KRW) and global prices, converting via the KRW/USD rate. It provides insight into Korean market sentiment.