Is the Bitcoin rally starting to heat up?

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The “Kimchi premium” is back. Bitcoin (BTC) is trading more than 6% higher across major South Korean crypto exchanges as of March 29.

Data from CryptoQuant shows that the premium in the South Korean market was nonexistent for many months and, in fact, dropped to around -6% in early February when BTC dipped below $30,000.

The so-called Kimchi premium forms when the price of Bitcoin trades higher on South Korean exchanges than other markets.

The return of this premium is a bullish sign suggesting that demand for Bitcoin in South Korea is likely outpacing supply.

Is the Bitcoin rally starting to heat up?
Bitcoin premium on Korean exchanges. Source: CryptoQuant

Why the Kimchi premium could be significant to Bitcoin

Although South Korea does not account for a majority share of the global Bitcoin market, it remains one of the major exchange markets by daily volume.

On CoinMarketCap, as an example, Bithumb is listed as the seventh-largest exchange in the world by daily trading volume, registering $1.3 billion in Bitcoin traded over the past 24 hours. 

The premium was especially high during past bull cycles, particularly in 2017 when BTC was trading well over 20% higher on South Korean exchanges compared with Coinbase and other large exchanges.

The Kimchi premium shows two major trends. First, it shows that the overall market sentiment in South Korea remains healthy. Second, it indicates that more buyers are entering the market.

The premium was already rebounding during the past several weeks before Visa announced that it will process transactions using USD Coin (USDC) on the Ethereum blockchain.

When the news was announced, both Bitcoin and Ether (ETH) rose by around 5% within three hours, leading to a strong recovery in the cryptocurrency market. The announcement may add more momentum to the rapid pace of institutional adoption so far this year and the possibility of a broader Bitcoin rally. 

“I smell crypto mass adoption here,” Ki Young Ju, CEO of CryptoQuant, reacted to the news. 

What traders think will happen next

According to the pseudonymous trader known as “Rekt Capital,” if Bitcoin breaks above $59,000, a new all-time high becomes highly probable.

Bitcoin weekly price chart. Source: Rekt Capital/TradingView

The trader noted:

“BTC is recovering this week after the down-side wicks of the previous 2 weeks showed slowing in the sell-side momentum $BTC will attempt to crack the confluent black diagonal & red horizontal resistance area (~$59,000) Break this area and #Bitcoin will reach new All-Time Highs.”

Fellow trader “CryptoCapo,” meanwhile, said that this momentum can potentially take Bitcoin to new highs and above, possibly to even $80,000. He said:

“The panic didn’t make any sense. Some people just want to see the world burn… Send it to $80k+”