• A recently published crypto study by Incheon National University and the Bank of Korea found a strong correlation between the “kimchi premium” and international remittances to China.
• The “kimchi premium” is the persistently higher Bitcoin price in South Korea compared to other countries.
• The study’s characterization of the cross-border Bitcoin trade and recommendations miss some key economic foundations.

The world of cryptocurrency is ever-evolving, and with the recent crypto study coming out of South Korea, it is no wonder why. Incheon National University and the Bank of Korea have been researching the effects of the “kimchi premium” on Bitcoin prices, and the results are both intriguing and important to understand.

The “kimchi premium” is a term used to describe the persistently higher Bitcoin price in South Korea compared to other countries. This is due to the lack of regulations and access to international exchanges, causing the demand for Bitcoin to be higher in South Korea than other countries. In the study, the authors found a strong correlation between this kimchi premium and international remittances to China.

However, the study’s characterization of the cross-border Bitcoin trade and recommendations miss some key economic foundations. For example, the authors suggest that Chinese traders are exploiting the kimchi premium and profiting from it, but this ignores the fact that markets are driven by supply and demand. If Chinese traders were indeed exploiting the kimchi premium, then the demand for Bitcoin would have to be so high in South Korea that it would outpace the supply, resulting in a higher price.

The study also fails to take into account other factors that could be influencing the price of Bitcoin in both South Korea and China. For example, the Chinese government has recently been cracking down on cryptocurrency exchanges, which could be the cause of the higher prices in South Korea. Additionally, the study fails to consider the role of speculation in the crypto markets, which could also be driving the kimchi premium.

In conclusion, while the study’s authors may have identified a connection between the kimchi premium and international remittances to China, their characterization of the cross-border Bitcoin trade and recommendations fail to take into account other factors that could be influencing the price of Bitcoin in both South Korea and China. As such, it is important to remember that markets are driven by supply and demand, and that speculation and other factors should also be taken into account when looking at the kimchi premium.