Bitcoin is down by almost 10% as it continued to face an uphill battle following the approval of much-anticipated spot ETFs by the SEC. But relief for the flagship crypto-asset might not transpire just yet.
In fact, the positive and negative movements of the Korean “Kimchi” Premium and the Coinbase Premium, respectively, signal a potential short-term correction in the Bitcoin market.
Bitcoin: Short-Term Correction Imminent
The Korea Premium Index (KPI) is a crucial metric for monitoring shifts in the market. This index assesses the ‘Kimchi Premium’ and provides insights into market sentiment within South Korea, which is one of the largest crypto players in the world.
According to on-chain analytics platform CryptoQuant, when the Korean Premium overheats by more than 3%, accompanied by a negative turn in the Coinbase Premium, it signifies that US investors are actively divesting while South Korean investors are engaging in competitive Bitcoin buying.
While referring to the historical chart, CryptoQuant’s on-chain analyst, MAC_D, said,
“The historical chart shows that when the Korea Premium overheats by more than 3% and the Coinbase Premium turns negative, it means that US investors are selling and South Korean investors are buying Bitcoin competitively.”
Traditionally, such a trend has been associated with signaling a short-term correction within a bullish market and even hinting at the initiation of a bear market at its top.
Despite historical patterns, the market is currently experiencing a recovery or bull rally phase. As a result, the analyst believes the signals are more indicative of an impending short-term correction rather than a full-fledged bearish trend.
Substantiating these cues are three consecutive signals observed since mid-December. The increased activity, such as substantial deposits into Bitcoin exchanges by whale investors and miners, coupled with investors selling GBTC ETFs, is amplifying the likelihood of a pullback and sideways movement in the near term.
This, in turn, diminishes the likelihood of an immediate increase in Bitcoin prices.
The development comes nearly a month after the Korean Premium recorded high values, depicting strong buying pressure from retail investors in South Korea.
New Mandate for South Korean Officials
South Korea has made a substantial move to improve transparency in its public sector. As of this year, a newly announced legislation by the country’s Ministry of Personnel Management requires high-ranking public officials to reveal their crypto holdings.
This move was prompted by a scandal in May 2023 involving Kim Nam-kuk, a Democratic Party member, who faced scrutiny for allegedly possessing more than $4.5 million in Wemix tokens issued by the South Korean blockchain firm Wemade.
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