Why Is Bitcoin More Expensive in Korea? How the Kimchi Premium Forms

When you compare Bitcoin prices on Korean and overseas exchanges, you can see cases where Bitcoin trades at a higher price in Korea than abroad.

For example, if the overseas Bitcoin price converted into won is ₩100 million but Bitcoin trades at ₩105 million on a Korean exchange, Korean investors are in effect trading the same Bitcoin at a price about 5% higher than abroad.

This phenomenon, in which crypto prices in Korea form higher than abroad, is called the kimchi premium (kimp). So why does Bitcoin get more expensive in Korea?

1. Because Korean investors buy harder

The most basic cause is supply and demand in the Korean market. When more people in Korea want to buy Bitcoin, buy orders increase and prices on Korean exchanges can go up.

Especially at times when Bitcoin surges or interest in the crypto market rises sharply, buying by Korean investors becomes stronger than abroad, and the price gap can widen.

2. Korea and the rest of the world are effectively separate markets

Bitcoin trades all over the world, but not every investor trades on one single exchange. Korean investors can use Korean exchanges such as Upbit, Bithumb and Coinone, while abroad there are many global exchanges.

Each exchange has its own order book, and prices form separately according to the buy and sell orders in each market.

So even for the same Bitcoin traded around the world, Korean and overseas trading prices can differ at a given moment.

3. Buying cheaply abroad and bringing it to Korea is not simple

One question may come up here.

In theory, trading on the price gap is possible. And when such trading is active, it can work to narrow the price gap between the different markets.

In practice, however, you also have to consider moving won and foreign currency, the exchanges' deposit and withdrawal policies, identity verification, the Travel Rule, the various procedures of banks and exchanges, and trading limits and fees.

So a price gap between Korea and abroad does not mean every investor can move large amounts of money right away. This friction between markets is one of the reasons the kimchi premium can last for some time.

4. The KRW/USD exchange rate matters too

Korean exchanges mostly show Bitcoin prices in Korean won (KRW), while overseas exchanges often use prices in USD or USDT.

So to compare Bitcoin prices in Korea and abroad, the overseas price has to be converted into won.

If the Korean Bitcoin price is ₩102,900,000 at this point, a simple calculation puts the Korean price about 5% above the overseas price in won.

Note: the prices and exchange rate above are examples to aid understanding.

5. The kimchi premium does not stay at the same level

Bitcoin being more expensive in Korea than abroad does not mean it is always more expensive by a fixed ratio. The kimchi premium keeps changing with market conditions.

When Korean buying grows stronger, the premium can widen; conversely, when overseas prices rise faster or Korean buying weakens, the premium can also shrink quickly.

6. Bitcoin can also become cheaper in Korea than abroad

Because of the name "kimchi premium", it is easy to think the Korean Bitcoin price is always higher than abroad, but that is not the case.

The Korean price sometimes forms below the overseas price, and this is commonly called a reverse premium or reverse kimp.

So the relationship between Korean and overseas prices is not fixed; it can keep changing with supply and demand in each market.

What Korean investors should watch out for when the premium is high

When the kimchi premium is high, you may be buying the same Bitcoin in Korea at a higher price than abroad.

For example, even if Bitcoin's overseas price stays the same, if strong Korean buying weakens and the premium shrinks, the Korean won price can move differently from the overseas price.

So rather than checking only the Korean price, it is better to look at Bitcoin's current overseas price and the exchange rate, and at whether the kimchi premium is widening or shrinking.

How to compare Bitcoin prices in Korea and abroad

On CoinGaja you can compare crypto prices on major Korean and overseas exchanges and check the current kimchi premium and reverse premium. The kimchi premium keeps changing with market conditions, so rather than judging where prices will go from one particular figure, it is better to check market conditions in Korea and abroad together.