The “Kimchi premium” in South Korea has returned to a discount, which means that it is once again possible to purchase cryptocurrencies such as Bitcoin at a lower price on exchanges located in South Korea.

Kimchi, a traditional Korean food, inspired the name of this event. The term “Kimchi premium” refers to the phenomenon where the price of Bitcoin (BTC) trades at a premium on exchanges located in South Korea relative to prices found in other markets.

Data provided by blockchain analytics service CryptoQuant indicates that between February 17 and 19, the Korea Premium Index fluctuated in a range of -0.24 and 0.01 points.

CoinMarketCap said that BTC was trading at $24,464 on Coinbase and $24,487 on Binance at the time of writing.

In contrast, the price was quoted at $24,386 on the Korean exchange Bithumb, while the price at which Bitcoin was traded on Upbit, one of the main exchanges in South Korea, was $24,405.

The scenario is the same for the cryptocurrency with the second largest market capitalization, Ether (ETH).

At the time of writing, CoinMarketCap statistics revealed that ETH was trading at $1,687 on Coinbase and $1,691 on Binance. However, on Bithumb and Upbit, ETH was changing hands for $1,682 and $1,683, respectively.

According to Doo Wan Nam, COO of node validation and venture capital firm Stablenode, the shift from a premium to a discount for kimchi reflects a decline in interest from retail investors in Korea.

“Broadly speaking, it indicates a drop in interest in cryptocurrencies from the retail sector in Korea,” he added. “Paradoxically, this is a better time to buy, since you know you can always sell yours to Korean players for a 20% premium later when they FOMO.”

Arbitrage refers to the process in which some traders try to make a profit by negotiating the price disparities that exist between various exchanges.

In the past, the extent of the Kimchi premium has been linked to the news, with large price drops reported in periods when negative news emerged on South Korean cryptocurrency exchanges.

The premium disappeared in early 2018, shortly after the South Korean government declared its intention to take regulatory action against cryptocurrency trading.

According to research published by the University of Calgary in 2019, Kimchi Premium first emerged in 2016.

According to the study’s findings, for the entire period beginning in January 2016 and ending in February 2018, Bitcoin exchanges in South Korea charged an average of 4.73% more than their counterparts in the United States.