Based on knowledge from CryptoQuant, Bitcoin’s (BTC) Kimchi Premium has surged to a three-year excessive of 12%. This spike comes amid a steep decline within the flagship cryptocurrency, triggered by considerations over the financial impression of looming US commerce tariffs on Canada, Mexico, and China.
Kimchi Premium Rises To three-12 months Excessive, What’s Driving It?
Beginning February 4, US President Donald Trump is ready to impose 25% tariffs on Canada and Mexico, whereas China will face a further 10% tariff on prime of the present levies. In response, the crypto market has skilled a pointy downturn, with its complete market cap plummeting from $3.7 trillion on January 30 to $3.1 trillion on the time of writing.
Amid this market decline, Bitcoin’s Kimchi Premium has surged to a three-year excessive. Sometimes, the Kimchi Premium will increase when demand for BTC rises considerably in South Korea. Nevertheless, this time, the surge is happening throughout a Bitcoin downturn somewhat than an uptrend, suggesting different underlying market forces at play.
In a put up on X, CryptoQuant CEO Ki Younger Ju highlighted that the present Kimchi Premium surge just isn’t due to heightened BTC demand. He defined:
Try the chart once more. The Kimchi Premium has spiked on the native backside – not as a result of Koreans are shopping for the dip, however as a result of BTC is being transformed to USD. Few Koreans are changing BTC into KRW. Different nations are doubtless seeing an analogous pattern.
The continued commerce tensions could also be driving this pattern. With US tariffs anticipated to take impact, the US greenback (USD) is more likely to strengthen towards different fiat currencies, making it a extra engaging retailer of worth throughout financial uncertainty. In consequence, South Korean traders could also be changing BTC to USD somewhat than Korean gained (KRW).
The place Is Bitcoin Headed Subsequent?
Over the previous 24 hours, greater than $2 billion in crypto liquidations have occurred, with the overwhelming majority being lengthy positions. This liquidation quantity surpasses these seen throughout main crash occasions such because the March 2020 COVID-induced market drop and the FTX collapse in November 2022.
Whereas the US tariffs are set to take impact tomorrow, Trump is reportedly nonetheless in talks with Canadian Prime Minister Justin Trudeau, sparking optimism that the commerce levies might be reconsidered or delayed. If the tariffs are referred to as off, the crypto market could regain a few of its current losses.
Nevertheless, to take care of its bullish construction and push towards a brand new all-time excessive (ATH), Bitcoin should reclaim the $105,000 value stage. Some analysts, nevertheless, predict that BTC could have to retest the $76,000 vary earlier than resuming its upward trajectory. At press time, BTC trades at $96,864, down 2.2% prior to now 24 hours.
Featured Picture from Unsplash.com, Charts from CryptoQuant and TradingView.com
