The current Kimchi Premium level could be a positive sign for the encryption market, as it shows that there is enough shorts for a rebound.

Against the backdrop of an overall fall downward trend in the broader market, South Korea's Bitcoin Kimchi Premium has fallen sharply, indicating that the enthusiasm of digital asset investors in the country has waned.

According to CryptoQuant, during the Asian trading session on Friday afternoon, Bitcoin Kimchi Premium big dump to 1.5%.

Bitcoin Kimchi Premium big dump

For those unfamiliar with the concept, Kimchi Premium refers to the difference between the price of Bitcoin on Korean exchange and the price of Bitcoin on other Crypto Assets trading platforms around the world. The term also borrows the name "kimchi," a traditional Korean food that is used here to vividly describe this unique price disparity.

It is precisely because of the capital control policy implemented in South Korea that the price of Bitcoin (BTC) on Korean exchange is different from other trading platforms around the world. These policies restrict foreign investors from buying and selling on South Korea's trading platforms, while also preventing local investors from taking advantage of price differences for arbitrage trades. Due to these restrictions, the supply of Crypto Assets in South Korea is not as abundant as in the global market, and the demand for Crypto Assets in South Korea is high, which partly contributes to the high price of Bitcoin in the Korean market, the so-called Kimchi Premium.

The Kimchi Premium is often seen as an indicator of the strength of demand for Bitcoin in the South Korean market. When the premium is high, it indicates strong demand for Bitcoin from South Korean investors, which may signal a bullish market; When premiums are low or falling, they may reflect weaker demand or a shift in market sentiment. Therefore, the Kimchi Premium is an important economic indicator closely watched by Crypto Assets market analysts and investors.

Kimchi Premium's decline to 1.54 percent indicates a decline in interest from South Korean investors in Bitcoin, which is in line with a decline in top local exchange volume. This decrease in volume may be due to a reflection of the overall trend of the market, or a dynamic change specific to the Korean market. According to CoinMarketCap, a decrease in volume can be observed, which may be related to investor sentiment, the state of supply and demand in the market, or macroeconomic factors.

A positive sign? **

The decline in Bitcoin Kimchi Premium, from a 27-month high of 10.32% at the beginning of March this year to the current 1.54%, is closely related to the Fluctuation of Bitcoin prices and market sentiment. Looking back at recent trends, in mid-February, the price of Bitcoin was around $48,200, and by the first week of March, the index soared to a 27-month high of 10.32%, showing strong demand for Bitcoin in the Korean market. Over the next few weeks, it rise to 11.44% as BTC hit a new all-time high.

However, since Bitcoin fall off its ATH and fall above $70,000, Kimchi Premium has started to decline steadily. Since April, the entire encryption market has undergone a significant correction, and the price of Bitcoin has also fallen above $60,000, once hitting a low of $56,700 before recovering.

While the decline in Kimchi Premium may reflect a change in market sentiment and investors' reassessment of risk, the current lower level of premium may also signal a positive shift in the market. A lower Kimchi Premium may indicate that the market has enough shorts for a price rebound and could set the stage for a further recovery in Bitcoin. This suggests that despite a period of correction in the market, investors may remain optimistic about Bitcoin's long-term value and potential.