Negative Kimchi Premium Suggests Next Bitcoin (BTC) Rally.

Bitcoin is currently trading at a lower price in South Korea, despite a broader market rally on global exchanges.

BTC Kimchi Premium turned negative for the second time since September, according to data from crypto market data firm Kaiko.

Kimchi Premium turns negative

Bitcoin Kimchi Premium is the difference between the price of BTC on South Korean exchanges and global crypto trading platforms. When the metric is positive, bitcoin trades at a more expensive price on Korean exchanges. However, the reverse case is when the premium becomes negative.

This market shift is the result of strict capital controls by the South Korean government, which prohibit foreign investors from trading on crypto exchanges in the country.

Also, the supply of crypto on exchanges is limited. South Korea’s largest, Upbit, offers users access to 215 coins, which is significantly less than several of its global competitors.

Due to limited supply, investor demands have skyrocketed, resulting in wide price differentials. At one point, bitcoin traded 30% higher on Korean exchanges.

However, while global bitcoin prices have recovered amid growing optimism over the upcoming US presidential election, the digital asset is trading lower in South Korea.

Bitcoin Rally Incoming?

Market analysts believe Kimchi Premium had turned negative due to declining investor sentiment in the Korean market. According to Kaiko, the current downtrend indicates that a bitcoin rally could be imminent. Historically, bitcoin has often seen significant price increases following a negative Kimchi Premium.

Also, the Coinbase Premium, another important metric that measures the difference between the price of BTC on Coinbase Pro and Binance, has recently changed course.

The indicator is also inside the negative zone, a phenomenon that usually precedes increases in the price of bitcoin. So, with both of these metrics now in the red, BTC price looks set for an upcoming price increase. Other factors that could drive this short-term increase are the upcoming US election and a possible rate cut by the Federal Reserve.

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