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The price of Bitcoin (BTC) continues to hover between $ 56,000 and $ 60,000 as the so-called “Kimchi Premium” soars to annual highs.

Kimchi premium forms when Bitcoin in South Korea is trading at a higher price relative to other major markets such as the United States.

The Kimchi premium came in 2017 exceeded 20%, making Bitcoin traded at around $ 24,000 in South Korea, while reaching nearly $ 20,000 in the US

Korea Premium Index. Source: CryptoQuant.com

Last week, on March 29, this premium reappeared, floating at 6%, which has since risen to about 11%.

Kimchi premium is 11%, is this bad for Bitcoin?

The last time the Kimchi premium soared to an all-time high, the Bitcoin market hit the top and saw a violent correction almost immediately afterward.

While the premium suggests the South Korean cryptocurrency market is showing signs of overheating, it is not high enough to mark a top.

Ki Young Ju, the CEO of CryptoQuant, said the premium is worrisome, but Bitcoin’s fundamentals look strong.

However, the difference between this time and 2017 is that South Korea represents only 1.7% of the trading volume of the global Bitcoin market.

As such, Ki explained that even if the South Korean market saw a downturn due to the rising premium, it wouldn’t have as big an impact as it did in 2017. He noted

“The fundamentals of $ BTC still look good, but the Korean bubble worries me. The prices of shitcoins are skyrocketing and the trading volume of Korean cryptocurrencies is higher than the national exchange (KOSPI). Even if the bubble collapses, the impact is unlikely to be significant as it is only 1.7% “

More importantly, unlike 2017, the ongoing Bitcoin rally was led by institutions and high net worth investors, as evidenced by Coinbase’s massive outflows.

But one reason many analysts are concerned about South Korea’s overcrowded cryptocurreny exchange market is that there is significant interest in newly emerging crypto assets.

Instead of Bitcoin and Ether (ETH), the highest volume cryptocurrencies on Bithumb, for example, are often new altcoins that have been around for a few months.

Wealthy investors keep buying

Less than a week ago, on March 29, Ki stressed that shorting Bitcoin is not the ideal trade as Coinbase Pro is seeing a large outflow.

Bitcoin Coinbase Pro outflows. Source: CryptoQuant.com

Outflows from top exchanges typically suggest that institutional investors are buying Bitcoin and moving their positions to self-hosted portfolios.

Ki said at the time:

A short position on $ BTC doesn’t seem like a good idea right now.

Since then, Bitcoin is up about 5% and has a relatively stable upward trend, possibly because the US dollar is showing renewed signs of weakness.