Why You Should Check the Exchange Rate with the Kimchi Premium

Many people check the kimchi premium by comparing only the coin prices on Korean and overseas exchanges. But Upbit shows prices in won, while overseas exchanges such as Binance show them in dollars or USDT, so to compare them accurately you must apply the won–dollar exchange rate.

For example, if Bitcoin is $70,000 on an overseas exchange and the rate is ₩1,400 per dollar, the overseas Bitcoin price in won is ₩98 million. If Bitcoin trades at ₩100 million on Upbit at the same time, the kimchi premium is about 2%.

The formula is:

The important point is that the premium can change even when the coin prices stay the same, because the exchange rate moves. When the won–dollar rate rises, the overseas price in won rises too, so the gap with the Korean price shrinks and the premium can fall. When the rate falls, the overseas price in won drops and the premium can rise.

So a sudden change in the premium does not necessarily mean Korean buying got stronger. The exchange rate may simply have moved before the coin prices did.

It also helps to know that the won–dollar rate you see at a bank or on a portal can differ from the USDT price on Korean exchanges. USDT is built to follow the value of one dollar per coin, but on Korean exchanges it can trade above or below the actual exchange rate, depending on supply and demand.

For example, if the rate is ₩1,400 but USDT trades at ₩1,430 on a Korean exchange, the premium calculated with the ordinary exchange rate differs from the gap you actually feel when you buy USDT and send it to an overseas exchange.

This is also why several kimchi premium sites can show slightly different numbers at the same time: each may use a different exchange rate and comparison exchange, and they refresh prices at different moments. When prices move fast, a few seconds can change the premium, so there is no need to read too much into small differences after the decimal point.

And a premium of 3% on screen does not mean you can actually earn 3%. Trading fees, withdrawal fees, currency exchange costs and the spread in the order book all count, and prices or the exchange rate can change while you send a coin. Suspended deposits or withdrawals and Travel Rule issues also have to be checked.

In the end, to read the kimchi premium properly, look not only at the percentage shown but at the Korean price, the overseas price and the exchange rate applied. If you actually plan to move money, calculating the USDT price and all the fees as well lets you make a more realistic judgment.