Why Does the Kimchi Premium Happen? 5 Causes Explained

When you trade crypto such as Bitcoin or Ethereum in Korea, you often see prices that differ from overseas exchanges. When Korean exchanges price a coin higher than overseas exchanges, it is called the kimchi premium (kimp).

For example, if Bitcoin costs ₩100 million on an overseas exchange, converted at the exchange rate, but trades at ₩105 million on a Korean exchange, there is a kimchi premium of about 5%.

So why do Korean and overseas prices differ for the same Bitcoin? Let us go through the main causes one by one.

1. When Korean investors buy harder

The most basic reason for the kimchi premium is the gap between supply and demand. When crypto fever rises in Korea and the number of buyers jumps, prices on Korean exchanges can climb faster than abroad.

Especially when Bitcoin or a particular altcoin surges and Korean investors pile in at once, you can see the kimchi premium widen quickly.

2. Korean and overseas exchanges are separate markets

Bitcoin trades all over the world, but not every exchange shares one order book. Someone buying Bitcoin on Upbit and someone buying it on an overseas exchange are trading in different markets.

So depending on each exchange's buying and selling demand and liquidity, the same coin can have a different price on each exchange.

3. Moving money across borders has real limits

Buying Bitcoin cheaply abroad and selling it for more in Korea looks as if it would erase the gap quickly, but in practice you have to deal with moving won and foreign currency, the exchanges' deposit and withdrawal policies, bank procedures, the Travel Rule, regulations and transaction limits.

4. The exchange rate also moves the kimchi premium

Korean exchanges mostly show prices in Korean won (KRW), while overseas exchanges often use USDT or USD. So to calculate the kimchi premium you have to convert at the current KRW/USD rate and compare in the same currency.

5. When the market surges or plunges

When the crypto market gets volatile, prices can move at different speeds on different exchanges. Especially when Korean trading volume jumps suddenly or buy orders crowd into one coin, the kimchi premium can widen.

The opposite case, when Korean prices fall below overseas prices, is called a reverse premium (reverse kimp).

What does a 5% kimchi premium mean?

Conversely, if the overseas price is ₩100 million and the Korean price is ₩98 million, there is a reverse premium of about −2%.

Is a high kimchi premium always dangerous?

A high kimchi premium alone does not tell you that Bitcoin or any other coin will go up or down. It is, however, one useful indicator of how much stronger Korean demand is than overseas demand.

Why you cannot look at the Korean price alone

To read the kimchi premium properly, check the Korean price, the overseas price and the exchange rate together. Supply and demand differ from coin to coin, not only for Bitcoin but also for XRP, Ethereum, Solana and others, so the premium can differ between coins at the same moment.