South Korea's crypto "kimchi premium" has started turning negative, and the country once known for trading cryptocurrencies has become a major stock trading nation.

Author: Doo (Compound Foundation)

Compiled by: Deep Tide TechFlow

Deep Tide Guide: South Korea has long been one of the most fervent retail crypto markets globally. The “Kimchi Premium” once reached as high as 20%. Now, the premium has turned negative for the first time, reflecting not only the collapse of altcoins, but also a signal that retail funds are fleeing the crypto market on a large scale—an important reference for understanding current market sentiment.

The crypto currency premium in South Korea is shifting into negative territory, which is highly unusual, because South Korea typically has a premium. By the way, South Korea often has a premium or a discount because capital controls make arbitrage difficult.

Below are some thoughts on why discounts are appearing.

1. The speculative market is in decline

South Korea’s market is known for speculation; at one point it pushed the premium to above 20%. However, as the crypto market has continued to struggle—especially with altcoins—market interest has been falling.

2. The Korean stock market is performing far better, pulling liquidity out of cryptocurrencies

Compared with last year, South Korea’s stock market has nearly doubled. Several technology companies, including Samsung and SK Hynix, have been leading the growth. This means that the liquidity previously in crypto is shifting into South Korea’s stock market.

3. The upcoming Korean cryptocurrency tax is also changing market preferences

Korean cryptocurrency taxes have been postponed multiple times, because South Korea lacks sufficiently good infrastructure to levy a cryptocurrency tax, and it is also a very unpopular political topic. However, the current government has at least confirmed that cryptocurrency taxation will begin starting next year.

Translator’s note: Real-time data confirms that a discount is occurring

Real-time monitoring data from the Korean Telegram channel “김프 출입국 사무소” (“Kimchi Premium Immigration Office”) directly corroborates the above conclusions. The channel specifically tracks the size of the premium or discount of the Korean crypto market relative to the international market. Below are three sets of data recorded within the same day:

“역프” is an abbreviation for “역 김치프리미엄,” meaning the reverse Kimchi Premium—crypto asset prices in South Korea are lower than in the international market. In other words, buying coins in South Korea is cheaper than buying them overseas.

From the data, several details can be observed:

First, the discount narrowed on the day from 3.04% to 2.44%, but it remained above 2% throughout, indicating that the discount is not a short-lived fluctuation but a market condition with some persistence.

Second, the Tether (USDT) price stayed stable at 1471–1472 won, while the KRW/USD exchange rate during the same period was between 1506–1516. The difference between the two is the direct source of the discount—there is insufficient demand in South Korea for stablecoins, and buying power is clearly weak.

Third, within the sideways trading range, the channel omitted 11 warning alert pushes, meaning the discount persisted over a longer period. The magnitude only changed slightly and did not trigger the reporting thresholds.

This set of data, from a micro perspective, verifies the article’s core judgment: South Korean retail investors are retreating from the crypto market, and the trend of net capital outflows has already left clear traces in the price structure.

It is also worth noting that Korean civilians have spontaneously formed such a detailed premium-monitoring system, which itself shows that “Kimchi Premium” has long been one of the core trading signals in South Korea’s crypto market.

And now, this signal has turned negative for the first time; its symbolic significance goes far beyond the numbers themselves.

The data shows that this year, the total market capitalization of listed Korean companies surged by 86%, reaching $5 trillion. Meanwhile, India’s total market capitalization fell back to $4.8 trillion. Since the beginning of this year, South Korea’s stock market has successively surpassed the stock markets of Canada, Germany, the UK, and France, with total market capitalization rising to sixth globally.

LAYOUT REFERENCE (source): total_lines=45, non_empty_lines=23, blank_lines=22