How To Make Money in Crypto Arbitrage Using Kimchi Premium

Trading strategies have evolved over the years, and the emergence of cryptocurrencies added a new dimension to financial markets, and traders found new ways to make money and passive income.

“Arbitrage” is one of the common ways for investors and traders to take advantage of market inefficiencies and capitalise on various market dynamics. Some might argue that the arbitrage trading strategy is not worth it because it brings fractional profits. 

However, Kimchi Premium takes this strategy to a whole new level, applying it to cryptocurrencies with a unique opportunity in the South Korean market. What is Kimchi Premium all about? Let’s discuss.

What Is The Kimchi Premium?

This method was named after a spicy South Korean Dish, Kimchi, and in trading, it refers to utilising the distinguished opportunities in the Korean market and engaging in crypto arbitrage to make significant gains.

This concept relies on the fact that cryptocurrencies are more expensive in South Korean markets than anywhere else, especially regarding Bitcoin, Ethereum and other major coins and altcoins.

This happens due to the restrictions on the South Korean markets, where the state closely supervises the cash flow inside and outside the country, creating remarkable market inefficiencies.

This creates market differences and inconsistencies, which creates a prominent opportunity to carry out arbitrage strategies. 

Explaining Crypto Arbitrage

Arbitrage strategy is utilising the differences in assets’ prices in different markets and executing trading orders that capitalise on these opportunities. Arbitragers usually buy in markets where an asset is cheap and sell it in another marketplace at a higher price.

Crypto arbitrage is a prime example of market arbitrage. However, volatility makes the opportunity to make gains more significant in cryptos than in other assets. Moreover, multiple crypto exchanges, centralised and decentralised, offer virtual coins and tokens at slightly different prices.

For example, a trade may buy 1 BTC at $35,500 in an exchange and find another exchange platform that buys 1 BTC at $35,510 from the trader. In this example, the trader makes $10 from this quick and straightforward transaction.

What Causes The Kimchi Premium?

The tight regulations the South Korean government imposes on local markets and trading isolate it from the global market and ensure that the local currency stays within the country’s borders.

The supply and demand for various markets in Korea differ from the rest of the world, including the crypto market. Also, since the law disallows currency outflow, businesses and individuals tend to use cryptos to conduct international transactions. 

Therefore, the demand for cryptos is higher in South Korea, increasing the price of major coins like Bitcoin and Ethereum compared to many exchange platforms.

Final Takeaways

Crypto arbitrage is a strategy where the trader utilises the market inefficiencies, buying from cheaper markets and selling at higher prices in another marketplace. This makes trading Bitcoin and other coins highly profitable.

The Kimchi Premium is a concept where cryptocurrencies provide a better arbitrage opportunity, given the market isolation and higher demand for cryptos in South Korea. Implementing this approach might be challenging, but it is considerably rewarding for crypto traders.