What is a Kimchi Premium?

Rootstone·May 14, 2025·3 min read

Market making is providing liquidity to a financial market by continuously quoting buy (bid) and sell (ask) prices for an asset. Market makers are entities, often firms, institutions, or automated systems, that stand ready to buy or sell cryptocurrencies anytime, ensuring that traders can execute orders without significant delays or price slippage.

Also known as Kimp, Kimchi Premium refers to the price discrepancy where cryptocurrencies trade at higher prices on South Korean exchanges (like Upbit or Bithumb) compared to global platforms (like Binance or Coinbase). For example, if Bitcoin is $100,000 globally, it might be $105,000 in South Korea, creating a 5% premium. 

Named after the traditional Korean dish kimchi, this phenomenon was first widely noted during the 2016–2017 crypto boom, peaking at 50% in early 2018.

This price gap creates a potential arbitrage opportunity, where traders could buy low abroad and sell high in South Korea.

Why Does It exist?

The Kimchi Premium isn’t just a random quirk. It’s driven by economic, regulatory, and cultural factors in South Korea. 

Here are the key reasons behind it:

Capital Controls: Strict regulations limit how easily money can flow in and out, making it hard to arbitrage away price differences.

Limited Supply: Local exchanges may have less supply, pushing prices higher when demand surges.

Speculative Trading: During bull markets, speculative buying can amplify price gaps.

Arbitrage Challenges: Even though traders might want to buy low globally and sell high in South Korea, fees, regulations, and delays make it difficult.

Current State as of May 12, 2025

As of today, the Kimchi Premium is showing a slight discount. For instance, Bitcoin is trading at about $103,511 on Upbit in South Korea and $104,504 on Binance globally, indicating a -0.16% premium (or discount). This suggests prices are currently lower in South Korea, but market conditions can change rapidly.

Implications for Traders

For traders, the kimchi premium offers a theoretical profit opportunity, but capital controls make it hard to execute trades profitably. It can also indicate market sentiment, with high premiums suggesting strong local demand and low or negative premiums indicating weaker interest.

Whether you’re looking to enhance market liquidity, execute large trades, optimize treasury operations, or explore strategic partnerships, Rootstone is here to help.