Bitcoin’s Kimchi Premium Has Diminished, But the Korean Market Is Proving Resilient
Good morning. Here’s what happens:
Prices: Bitcoin continues its slow rise, while Korea’s market remains strong with diversified interest, says Matrixport’s Markus Thielen.
Insight: The US central bank will probably raise interest rates by 25 basis points on Wednesday. Will monetary hawking end? A crypto market analyst weighs in.
CoinDesk Market Index (CMI)
BTC/ETH prices per CoinDesk indices, as of 07:00 ET (11:00 UTC)
A robust Korean crypto market
Good morning, Asia.
As East Asia begins its working day, bitcoin and ether continue to climb, boosted by another chapter of banking turmoil and cooler-than-expected jobs data. Bitcoin opens at $28,644, while ether is up 2% at $1,869.
As crypto traders continue to look to US economic data, a new narrative is forming in Korea – and a common metric has been thrown out by the victory.
During a recent appearance on CoinDesk TV, Matrixport’s head of research, Markus Thielen, said that Korea’s retail-focused crypto market continues to be strong. Korean traders in particular are interested in games, altcoins and of course XRP, which continues to rise in Korea.
“We have also seen this in the last bull market at the end of 2017, when Ripple accounted for 50% of all volume, and it was mainly traded in Korea,” Thielen said.
Thielen also notes that specific altcoins are on the rise in Korea, including Mass Vehicle Ledger and Serum.
Bitcoin, on the other hand, remains at 48% dominance.
But despite this, data from CryptoQuant shows that the Korean “kimchi” premium remains weak. Without the buying pressure on Korean exchanges, there does not seem to be the same price premium as before. Maybe because the market is now interested in things other than bitcoin.
No end to price increases?
Is tomorrow the end of interest rate hikes as we have recently known them?
Maybe, suggested Oliver Rust, product manager at inflation data aggregator Truflation in an email.
On Wednesday, it is widely expected that the US central bank will raise interest rates by 25 basis points for the third time in a row. The Federal Reserve has raised interest rates by 525 basis points over the past 14 months. But whether it continues this aggressive monetary policy or pulls back is still uncertain, Rust wrote.
“With the US banking sector suffering from a credit crunch following recent bank failures, and an acquisition of First Republic … secured only by US regulators and JP Morgan, the Fed will weigh its interest rate decisions carefully from this point forward,” Rust wrote. “But if inflation doesn’t let up, we could well see another rise, despite tighter credit conditions. It’s worth remembering that while an inflation rate of 5% is lower than last year, it still points to rapid price rises from already high levels.
He added: “Even if this hike turns out to be the Fed’s last, we don’t expect interest rates to come down from these levels anytime soon.”
Fed critics have accused central bankers of fueling the current banking crisis through overly hawkish monetary policy. They had hoped the bank would suspend its rate hike diet.
But Rust noted that the Fed likely felt compelled to raise interest rates amid mixed signals that the economy is still overheating, which would mean inflation is out of control. Most notably, despite an unexpectedly weak Job Openings and Labor Turnover Survey (JOLTS), the labor market remains robust.
He added that inflation, which has fallen steadily over the past six months to today’s 5%, is likely to reverse at least a little amid OPEC’s oil output cuts and increased energy demand from China, which has reopened its economy. “This increase is already reflected in the prices of energy commodities,” he wrote.
Rust wrote that against the current backdrop, another 25 basis point rate hike by the Federal Reserve is all but inevitable. After that, the central bank is likely to adopt a wait-and-see approach to evaluate the economic impact of the decision. After all, rates will have increased by a whopping 500bps since March 2022, which is a lot for any economy to swallow.”
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In case you missed it, here’s the latest episode of “First Mover” on CoinDesk TV:
Bitcoin Falls Towards $28K After Volatile Price Movements; Korea’s Crypto Market Trends
Bitcoin’s decline on Monday contrasted with the asset’s lack of movement over the past six weeks. STORM Partners Managing Partner Sheraz Ahmed joined “First Mover” to discuss the latest macro catalysts impacting the crypto market. In addition, a new report has shed light on the evaluation of cryptoassets and trends in the Korean market. Matrixport’s head of research and strategy, Markus Thielen, shared his findings. And OPNX, a bankruptcy-claim exchange set up by the founders of collapsed hedge fund Three Arrows Capital, has been formally reprimanded by Dubai’s crypto regulator.
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