What the kimchi premium is
The kimchi premium (often shortened to “kimp” in Korea) is the gap by which the same coin's price on Korean exchanges runs above (or below) its price on overseas exchanges, expressed as a percentage. For example, if bitcoin is worth KRW 100 million at the overseas price converted to KRW but trades at KRW 100.3 million on Upbit, Korea's largest crypto exchange, the kimchi premium is about +0.3%.
The name carries “kimchi” because this kind of price gap stood out particularly in the Korean market. During Korea's crypto boom of 2017 to 2018, the premium at times widened to tens of percent, so acquiring the same bitcoin in Korea cost far more than it did overseas.
The kimchi premium is a current-state indicator that shows how far apart prices in the Korean and overseas markets are “at this moment.” It is not a number that forecasts future prices but closer to a thermometer that measures the temperature gap between the two markets.
How it is calculated
The kimchi premium is (KRW price on a Korean exchange ÷ overseas price converted to KRW, minus 1) × 100. The key part is “converting the overseas price to KRW.” Most overseas exchanges quote in dollars (or USDT), so to compare on the same yardstick, the price has to be multiplied by the exchange rate and converted to KRW.
Jupick calculates the premium using Upbit's current KRW price as the Korean price and the global price converted to KRW as the overseas benchmark. As a result, the premium reflects not only supply and demand for the coin itself but also movements in the KRW/USD exchange rate.
A positive (+) value is a “premium,” where the Korean price is higher than overseas, and a negative value is a “reverse premium,” where the Korean price is lower.
What a premium and a reverse premium say
A widening positive premium is commonly read as a sign that, at that moment, demand in Korea outweighs the supply on offer. The premium tends to grow when investor sentiment in Korea is hot or when moving money from overseas into Korea is not smooth.
A reverse premium, by contrast, tends to appear when the supply offered in Korea is relatively heavy or the market has shrunk. These explanations, however, only describe the current state, “this is how supply and demand in Korea look now,” and are not signals of the price going up or down from here.
The kimchi premium arises from features specific to the Korean market (exchange access, rules on moving money, the mix of investors), so it is useful to look not just at the absolute figure but also at how wide it is now compared with usual.
Points to watch when interpreting it
First, the kimchi premium moves with the exchange rate. Even if supply and demand for a coin stay the same, swings in the KRW/USD exchange rate can change the premium figure, so not every change in the premium can be put down to supply and demand for coins.
Second, the premium differs by exchange and by coin. At the same moment, bitcoin and altcoins can carry different premiums, and coins not listed on Upbit have no KRW price in Korea to begin with, so their premium cannot be calculated.
Third, using the premium as a trading signal, along the lines of “the premium is wide, so acquire” or “there is a reverse premium, so exit,” is risky. Because of rules on moving money between countries, it is very hard for individuals to actually capture the gap as an arbitrage profit, and the premium can narrow or widen in an instant.
Jupick provides the kimchi premium only as a reference indicator of the current state and gives no trading advice on any coin. This content is for information only and is not investment advice.
Frequently asked questions
- What is the kimchi premium?
- The kimchi premium is the percentage by which the same coin trades higher or lower on Korean exchanges than on overseas exchanges. The name carries “kimchi” because this price gap stood out particularly in the Korean market. It is not a number that forecasts future prices but closer to a thermometer that measures the current temperature gap between the two markets.
- How is the kimchi premium calculated?
- It is the KRW price on a Korean exchange divided by the overseas price converted to KRW, minus 1, times 100. Most overseas exchanges quote in dollars or USDT, so to compare on the same yardstick, the price has to be multiplied by the exchange rate and converted to KRW. A positive value is a premium, with the Korean price higher, and a negative value is a reverse premium, with the Korean price lower.
- Can a wide premium be read as a cue to acquire coins, and a reverse premium as a cue to exit?
- Using it as a trading signal that way is risky. The premium only shows the current state of supply and demand in Korea and says nothing about the price going up or down. Because of rules on moving money between countries, it is very hard for individuals to actually capture the gap as an arbitrage profit, and the premium can narrow or widen in an instant. On top of that, swings in the exchange rate can change the premium even when supply and demand stay the same.