Chainalysis Report: South Korea’s Crypto Market Growth Fueled by Rise in Korea Premium Index

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Ruholamin Haqshanas

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Ruholamin Haqshanas

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Ruholamin Haqshanas is a contributing crypto writer for CryptoNews. He is a crypto and finance journalist with over four years of experience. Ruholamin has been featured in several high-profile crypto...

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September 17, 2024

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South Korea’s cryptocurrency market has experienced notable growth thanks to the increasing Korea Premium Index, according to a recent report by blockchain analysis firm Chainalysis.

The Korea Premium Index measures the price difference for major cryptocurrencies like Bitcoin (BTC), Ether (ETH), and various altcoins traded on local platforms compared to international exchanges.

Chainalysis noted that local demand, coupled with institutional trading and South Korea’s unique market conditions, has caused cryptocurrency prices on domestic exchanges to rise above global averages.

South Korea Traders Are Paying Higher Prices

The report said the sharp increase in the Korea Premium Index reflects how South Korean traders are paying significantly higher prices for digital assets during periods of market volatility.

Both retail and institutional investors appear to be taking advantage of these price discrepancies, seeking potential gains during uncertain times.

A key finding from the report is that institutional investors play a crucial role in driving the Korea Premium Index.

Large-scale transactions by institutional participants contribute to the premium by moving significant volumes of cryptocurrency.

“Institutional activity is a significant driver of the price discrepancies,” the report said.

These investors often engage in arbitrage, buying crypto at lower prices from global exchanges and selling them at higher prices on South Korean platforms.

Additionally, the report mentions that South Korean investors frequently use local exchanges to manage funds, with the transfer of assets from domestic to global exchanges closely linked to the rise in the premium.

In a related finding, the Financial Supervisory Service (FSS) revealed that employees of Dunamu, the operator of the Upbit exchange, earned significantly more than employees at major banks like KB Kookmin Bank and Hana Bank.

Dunamu staff received an average salary of 133.73 million South Korean won ($99,500), highlighting the lucrative nature of South Korea’s burgeoning crypto sector.

South Koreans Turn to Crypto

A recent survey has revealed that most young South Koreans are losing faith in the national pension system, with many stating they see crypto and stocks as a better alternative.

The study found that more than three-quarters of people aged 20-39 “don’t trust” state-issued pensions.

Over half of respondents who said they were making their own pension plans claimed they were building their retirement funds with stocks and crypto.

Interestingly, even election candidates themselves have exposure to cryptocurrencies, with approximately 7% of them owning digital assets, according to a report by Yonhap that analyzed their asset disclosures.

Just recently, it was reported that South Korea is set to introduce stricter regulations for token listing on exchanges, including the blocking of tokens that have been hacked.

The country’s financial authorities are preparing to release guidelines for virtual asset trading support, expected to be published by the end of this month or early next month.