Korean Market Proves Resilient as Bitcoin’s Kimchi Premium Narrows: First Mover Asia

"Bitcoin on the Rise as Korean Market Diversifies: Insights from Matrixport's Markus Thielen"

Bitcoin and ether continue to climb in Asia, with the former opening at $28,644 and the latter up 2% to $1,869. Crypto traders are keeping a close eye on US economic data, but a new narrative is forming in Korea. Matrixport’s head of research, Markus Thielen, recently appeared on CoinDesk TV and said that Korea’s retail-focused crypto market remains strong. Korean traders are particularly interested in gaming, altcoins, and XRP, which continues to surge in Korea. Thielen also notes that specific altcoins, including Mass Vehicle Ledger and Serum, are surging in Korea, while bitcoin remains at 48% dominance.

Despite this, data from CryptoQuant shows that the Korean “kimchi” premium remains weak. Without the buying pressure on Korean exchanges, there doesn’t seem to be the same price premium as before. This could be because the market is now interested in things other than bitcoin. Thielen’s insights suggest that the Korean crypto market is resilient and continues to diversify.

The US central bank is expected to raise the interest rate by 25 basis points on Wednesday. However, Oliver Rust, head of product at inflation data aggregator Truflation, suggests that this may not be the end of interest rate hikes as we have known them. The Federal Reserve has increased the rate 525 basis points over the past 14 months. But whether it continues this aggressive monetary policy or retreats remains uncertain. Rust suggests that the Fed will be weighing its rate decisions carefully from this point on.

The US banking sector has suffered a credit crunch following recent bank failures, and the buyout of First Republic has only just been secured by US regulators and JP Morgan. Therefore, even if inflation refuses to budge, we could well see another hike, despite tighter credit conditions. Rust notes that inflation, which has steadily declined over the past six months to its current 5%, is likely to reverse at least slightly amid OPEC’s cut in oil production and increased demand for energy from China, which has reopened its economy.

Rust writes that against this backdrop, another 25 basis points rate hike from the Federal Reserve is all but inevitable. After that, the central bank is likely to adopt a wait-and-see approach to evaluate the economic impact of its decision. Rates will have increased by a whopping 500bps since March 2022, which is a lot for any economy to swallow. Fed critics have accused central bankers of spurring the current banking crisis through overly hawkish monetary policies. They had been hoping the bank would suspend its diet of rate hikes.

In other news, Coinbase has opened an offshore crypto derivatives exchange based in Bermuda, which will not be open to US traders. Meanwhile, the number of stablecoins held on exchanges has slipped to a two-year low, while bitcoin’s price has rallied by 70%. DCG’s CFO has stepped down as the crypto conglomerate repays a $350m loan. The company’s revenue increased from the fourth quarter as crypto prices soar.

NFT collection Goblintown will prioritize the ‘worst’ traders in its second season. Mint: Big Inc, the sequel to the goblin-themed collection, will be giving a 50% discount to token holders who mint using the meme coin PEPE. The market value of ‘Bitcoin Request for Comment’ tokens has surged to $137m. The BRC-20 standard sounds like the popular ERC-20, but the two are different, with the former lacking the ability to interact with smart contracts.

In summary, the crypto market in Asia continues to climb, with Korea’s retail-focused crypto market remaining strong and diversifying. The US central bank is expected to raise the interest rate by 25 basis points, but it remains uncertain whether it will continue this aggressive monetary policy or retreat. Coinbase has opened an offshore crypto derivatives exchange based in Bermuda, and the number of stablecoins held on exchanges has slipped to a two-year low. Finally, NFT collection Goblintown will prioritize the ‘worst’ traders in its second season.

Martin Reid

Martin Reid

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