SEOUL, Feb. 2 (Korea Bizwire) — South Korea’s “kimchi premium” — a reference to the 15 to 25 percent premium on Bitcoin prices locally compared with foreign markets — is now reversed, with the price of one unit of the most widely known cryptocurrency dropping below valuations abroad.
According to Bithumb, South Korea’s largest cryptocurrency exchange, one bitcoin was valued 9.92 million won at 5:10 a.m. on February 2, 10.56 million won at 6:40 a.m. and fell to 8.84 million won by 10:20 a.m.
Less than a month prior, on January 6, the currency reached a peak of 25.92 million won.
Bitcoin’s freefall is attributed to regulators ramping up pressure both in South Korea and abroad, and the recent scandal in connection to cryptocurrency stablecoin Tether.
South Korea’s government has made no secret of its disapproval of the cryptocurrency market and preoccupation with the rising and falling of market rates. Authorities have introduced a real-name trading system to curtail excess speculation and bring under control cryptocurrency’s “corrupting” influence.
Meanwhile in the United States, the SEC has issued a ban on new ICOs after one initial coin offering fell under suspicion of fraud.
Further piling onto cryptocurrency traders’ woes is the Commodity Futures Trading Commission’s investigation into exchange Bitfinex and Tether.
A stablecoin supposedly pegged to the U.S. dollar, since late last year Tether has been suspected of being used to drag up Bitcoin market values through Bitcoin and Ethereum for Tether swaps.
In addition, the claim made by the company behind Tether, that it holds sufficient dollars to match every Tether unit in distribution, has been called into question.
Currently, Tether coins in circulation amount to roughly $2.3 billion.
An insider at Bithumb said, “Because of the Tether issue, there has been a loss in confidence in cryptocurrency as a whole, leading to Bitcoin’s value tumbling below 10 million won.”
Despite these troubles, Bitcoin’s value has suffered more in South Korea than elsewhere. As of 10:38 a.m. (February 2), one coin was valued at 9 million won, 4.5 percent lower than the global rate according to Bithumb’s internal evaluation.