What Is the Kimchi Premium?
The Kimchi Premium refers to the phenomenon where cryptocurrency prices on Korean exchanges (Upbit, Bithumb, etc.) are higher than those on overseas exchanges (Binance, Coinbase, etc.). It is often abbreviated as 'KP'. For example, if Bitcoin is $60,000 on Binance but the KRW-equivalent price on Upbit is $62,000, the Kimchi Premium is approximately 3.3%.
Why Does the Kimchi Premium Occur?
The Kimchi Premium arises from several structural factors unique to the Korean market that create a price gap.
- Capital movement restrictions: South Korea's Foreign Exchange Transactions Act imposes annual overseas remittance limits, making it difficult for individuals to profit from arbitrage by buying cheap abroad and selling at a premium domestically.
- Concentrated investment demand: South Korea has a high appetite for cryptocurrency investment, meaning domestic demand often exceeds supply.
- KRW market structure: Korean exchanges operate KRW-denominated markets, so exchange-rate fluctuations directly affect the Kimchi Premium.
- Market sentiment: During bull markets, rising FOMO (fear of missing out) tends to push the Kimchi Premium higher.
How to Calculate the Kimchi Premium
The Kimchi Premium can be calculated using the following formula.
Kimchi Premium (%) = ((Upbit KRW price / exchange rate) − Binance USD price) / Binance USD price × 100
Example: If the Upbit BTC price is ₩83,000,000, the exchange rate is ₩1,350/USD, and the Binance BTC price is $60,000:
KP = ((83,000,000 / 1,350) − 60,000) / 60,000 × 100 ≈ 2.47%
How to Interpret the Kimchi Premium
The Kimchi Premium level gives insight into the current state of the market.
| KP Level | Market State | Interpretation |
|---|---|---|
| Below 0% (Negative) | Oversold / Bear Market | Korean prices are cheaper than overseas. Investor sentiment is extremely depressed. |
| 0–2% | Normal | Within the normal range. A natural difference driven by exchange-rate fluctuations. |
| 2–5% | Early Overheating | Domestic demand is rising. May signal the beginning of a bull market. |
| 5%+ | Overheated | Excessive FOMO. Be cautious of a short-term correction. |
Check the Live Kimchi Premium
The TradeHub dashboard automatically calculates the Kimchi Premium by comparing Upbit and Binance prices in real time. You can see the current KP at a glance without any manual calculation, and exchange-rate changes are reflected instantly.
