Bitcoin Kimchi Premium Rises As South Korea Struggles With Political Chaos

The ongoing political unrest in South Korea has had an impact on the country's financial markets. The South Korean won has fallen to its lowest value against the US dollar since March 2009.

This depreciation is reflected in the Bitcoin Kimchi Premium, which shows the difference between the price of BTC in South Korea and other countries. On-chain data from CryptoQuant shows that domestic investors spend 3% more than international crypto users to buy BTC.

South Korea's political problems

Jeff Park, Head of Alpha Strategy at Bitwise, shares insights into South Korea's current political troubles. He also explained that the country's lawmakers have recently submitted a motion to impeach the Prime Minister and Interim President Han Dak-soo. This comes two weeks after parliament ousted President Yoon Suk-yeol, who has been in power since May 2022.

The president was ousted after trying to maintain martial law in the country against “anti-government” forces. The implementation of martial law involves the transfer of authority from civilians to the military. This regulation restricts citizens' freedom of press and assembly and reduces the power of government agencies and courts.

Highlighting how the ongoing political upheaval threatens global democracy, a Bitwise executive wrote:

“The use of impeachment as a political tool, combined with allegations of foreign election meddling in the face of disinformation, highlights the fragility of democracy.” This is not just a Korean story; It is a warning for the building of democracy at the international level.

Impact on Bitcoin Kimchi Premium

News of the resignation of South Korea's acting president sent the winner into a frenzy.

Crypto asset prices are mostly high on South Korean foreign exchange platforms, mainly due to strict capital control policies by the country's regulators. At the time of writing, BTC was 144,450,000 won ($98,000) on South Korean exchange Appbit, compared to $95,100 on American exchange Coinbase.

Previous reports have shown that Bitcoin's kimchi premium increase often reflects the bullish flow on South Korean crypto exchanges.

Local investors quickly flocked to dollar-denominated assets such as BTC as a refuge from the struggling win, despite widening price differentials.