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The Korean Financial Services Commission, a local finance regulator, forms a special virtual asset committee that might create the legal framework for a Bitcoin Spot ETF launch in the country. Ki Young Ju, CEO and cofounder of CryptoQuant, explains why this is bullish for the first cryptocurrency - and what is next for "Kimchi Premium" indicator for the BTC price.
Bitcoin Korean Premium might vanish, here's why
Bitcoin Korean Premium Index, i.e., the difference between the price of Bitcoin on Binance (BNB) and on Korean exchanges, might soon be mitigated. A local regulator formed the unit that might be working on greenlighting BTC Spot ETFs and corporate accounts for crypto, according to CryptoQuant's CEO Ki Young Ju.
The Korean SEC (금융위원회) has formed a virtual asset committee to discuss the approval of #Bitcoin spot ETFs and the allowance of corporate accounts for crypto exchanges.
— Ki Young Ju (@ki_young_ju) October 10, 2024
This is bullish and will mitigate the Kimchi premium as arb funds and MMs enter the Korean market. pic.twitter.com/Mjq2xX5AVg
Such a move by a local regulator might trigger the inflow of capital into the country's crypto segment. CryptoQuant's CEO expects more arbitrage funds and market makers to join the Korean market.
As he demonstrated on the chart, now the Bitcoin Korean Premium Index is at its lowest position, while its last notable spike coincided with a Bitcoin (BTC) rally in Q1, 2024.
The Bitcoin Korean Premium Index is often interpreted as an indicator of the purchasing power of local investors interested in adding to their BTC positions.
It is tracked together with Coinbase Premium, which mirrors similar processes on American markets based on Coinbase's BTC/USD pair performance.
Bitcoin spot ETFs: Another chapter saga?
So far, Upbit, BitHumb and Korbit are major exchanges on the local market that are offering trading for BTC/KRW fiat pairs.
The potential launch of Spot Bitcoin ETFs in Korea might have huge effects on the entire cryptocurrency market. In January 2024, the U.S. became the first to start offering these products to investors after years-long legal processes.
In April 2024, such approval arrived in Hong Kong, while in July, the U.S. greenlit Ethereum ETFs. However, only U.S. Spot Bitcoin ETFs managed to attract sufficient liquidity.