The South Korean cryptocurrency market has seen significant growth due to the rise of the Korea Premium Index, according to a recent report from blockchain analysis firm Chainalysis.
The Korea Premium Index measures the price differences of major cryptocurrencies such as Bitcoin (BTC), Ether (ETH) and various altcoins traded on domestic platforms compared to international exchanges.
Chainalysis noted that domestic demand, combined with institutional trade and the unique conditions of the South Korean market, has driven cryptocurrency prices higher than the global average on local exchanges.
South Korean retailers charge higher prices
The report said the sharp rise in the Korea Premium Index reflects how South Korean retailers are charging very high prices for digital assets during periods of market volatility.
Both retail and institutional investors appear to be taking advantage of these price differentials, looking for potential returns in uncertain times.
The key takeaway from this report is that institutional investors play a key role in driving Korea’s premium index.
High-quality transactions by institutional participants contribute to the premium by moving significant volumes of cryptocurrency.
“Institutional activity is a key driver of price mismatches,” the report said.
These investors often engage in arbitrage, buying cryptocurrencies at low prices on global exchanges and selling them at high prices on South Korean platforms.
In addition, the report noted that South Korean investors are more likely to use local exchanges to manage currencies, with asset transfers from local to global exchanges closely related to the upswing of the premiums.
In a related report, the Financial Supervisory Service (FSS) revealed that employees of Dunamu, the operator of Upbit Exchange, earn significantly more than employees of big banks such as KB Kookmin Bank and Hana Bank.
Dunamu employees earned an average salary of 133.73 million South Korean won ($99,500), underscoring the lucrative nature of South Korea’s booming crypto sector.
South Koreans are turning to crypto
A recent survey found that the majority of South Koreans are losing faith in the country’s pension system, with many saying they see crypto and stocks as better alternatives.
More than three quarters of 20-39 year olds “don’t trust” state-provided pensions, a survey has found.
More than half of respondents who said they build their retirement plans said they build their retirement funds with stocks and cryptocurrencies.
Interestingly, even the election candidates themselves have exposure to cryptocurrencies, with about 7% of them owning digital assets, according to a Yonhap report that analyzed their asset exposure.
Recently, it was reported that South Korea plans to introduce more stringent rules for listing tokens on exchanges, including blocking paid tokens.
The country’s monetary regulators are preparing to publish guidelines to support real-estate transactions, which are expected to be published later this month or early next month.