South Korean Crypto Market Growth at Premium Index: Chinaization Increases
According to a recent report by Chinalysis, the South Korean cryptocurrency market is experiencing a growth spurt, mainly due to the rise of the Korea Premium Index.
The report highlights that local demand, institutional transactions and unique market conditions in the country are driving crypto prices in local currency above the global average.
The Korea Premium Index measures the price difference between the prices of altcoins such as Bitcoin (BTC), Ether (ETH) and altcoins on South Korean exchanges and international markets.
A chart showing the change in the Korea Premium Index since July 2022. Source: CryptoQuant
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The growth of environmental demand
A Chinalysis report showed a sharp rise in the Korea Premium Index, which described “the extent to which South Korean traders are paying above-market prices” for digital assets.
The premium is historically at its highest during periods of market volatility and turbulence, prompting retail and institutional investors to take advantage of growth opportunities.
The report also found that “South Koreans often use local exchanges” for fund management and that the amount transferred from local to international exchanges is “highly correlated” with premiums.
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Institutional factors and implications
The report details institutional investors and reveals that they are fueling the Korea Premium Index with large transactions.
“Institutional activity is a major driver of price volatility.”
Institutional participants control and alter the market's trading volume, further increasing the premium on the local currency.
According to the report, this rise in premiums occurs when institutional investors engage in arbitrage opportunities, buying crypto at low prices from international exchanges and selling it on South Korean platforms.
A chart showing the difference in turnover rates between retail, professional and institutional investors. Source: Chain analysis
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South Korean crypto workers earn more than banks
According to a report released by the Financial Supervisory Service (FSS), the average salary of Dunamu employees is higher than that of mainstream bankers.
Employees and executives at Dunamu, the operator of the Upbit cryptocurrency exchange, earned an average of 133.73 million South Korean won (about $99,500) a year.
The comparison was stark with employees of large banks such as KB Kookmin Bank, Hana Bank, Wori Bank and Shinhan Bank, which earned an average of 116 million won (approximately $86,700).
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