South Korean authorities have launched a probe into the Bitcoin ‘Kimchi Premium.’
The investigations cite that the Kimchi Premium was used to make profits that were transferred abroad through illegal remittances.
Authorities in South Korea have launched investigations into the famous Bitcoin ‘Kimchi’ premium.
According to local reports, the Seoul Central District Prosecutor’s Office has launched a new probe into the Kimchi Premium’s connection with illegal foreign remittances worth over 2 trillion Korean Won, or approximately $1.5 billion. The investigations claim that the money illegally sent abroad constitutes profits generated using the Kimchi premium to trade Bitcoin.
In addition, the irregular financial transactions related to the funds were allegedly carried out between Woori Bank and Shinhan Bank, both leading financial institutions in South Korea. South Korea’s Financial Supervisory Service noted that the Bitcoin profits attained using the Kimchi Premium were possibly transferred to China through the two banks.
However, an official from the Prosecutor’s office told the local media outlet that they were ‘just reviewing the data.’
What is Bitcoin’s ‘Kimchi’ Premium?
Bitcoin’s ‘Kimchi’ Premium is an index that tracks BTC’s value on South Korean exchanges relative to other global platforms in the United States and Europe. Its name is derived from the popular South Korean dish of a similar name, made of fermented cabbage.
The Kimchi Premium is often used to foreshadow Bitcoin’s movements in the crypto markets. When it is positive, Bitcoin traders see it as a sign that BTC investors in South Korea are bullish and that the digital asset will soon experience gains in the markets. When the Kimchi premium is negative, the same Bitcoin traders believe that the market conditions have turned bearish and that BTC will soon undergo a pullback.
Bitcoin’s Kimchi Premium is Currently at 2.22.
At the time of writing and according to CryptoQuant, Bitcoin’s Kimchi premium is at 2.22. This is despite the ongoing bearish environment as a result of record-breaking inflation in the United States and Europe and plans by several global central banks to continue increasing interest rates.
Therefore, caution is advised going long on Bitcoin despite its positive Kimchi premium. The reason is that the global macro-economic environment hints at a bearish few weeks, if not months, in the traditional and crypto markets.