Bitcoin Price Surges Past $2,070 in South Korea, Arbitrage Opportunity?
https://www.cryptocoinsnews.com/bitcoin-price-surges-past-2070-south-korea-arbitrage-opportunity/As of May 12, bitcoin price in the South Korean exchange market is $2,076, approximately 12.7 percent higher than that of the global average price. To be exact, bitcoin is being traded on South Korean exchanges and trading platforms at a price that is $269 higher than the global average price of $1,807.
Ever since the debut of venture capital backed and regulated bitcoin exchanges including Korbit and Bithumb, the South Korean bitcoin exchange has presented excellent arbitrage opportunities for traders. South Korean bitcoin exchange have always demonstrated a high premium on their listed bitcoin prices and trading rates.
“This kind of gap exists in other markets too, but the South Korean situation is atypical because it’s by no means a small or immature market. The trading volume on Bithumb (the larger of the two exchanges, with nearly twice the depth of its competitor Korbit) during the last 30 days has never dropped below 1,390BTC, with an average of about 3,000BTC (and a high of over 6,000).”
Considering that the South Korean exchange market is mature and developed, which is quite evident considering that it is the fourth largest bitcoin exchange market behind Japan, the US and China, one explanation that could rationally justify arbitrage opportunities and high premium bitcoin prices listed by local bitcoin exchanges is the presence of strict Know Your Customer (KYC) and Anti-Money Laundering (AML) policies.
According to bitcoin researcher Cryptonight, the author of the above-mentioned analytical blog post, South Korean businesses will likely be questioned by the local government and central bank if they attempt to purchase large amounts of bitcoin in overseas. Vice versa, if a foreign business was to sell large amounts of bitcoin on South Korean exchanges, it would be questioned by the local government in regard to the purpose of the funds.
“If a Korean-owned business were to attempt to buy Bitcoin in large quantities from overseas, they would be questioned and likely fined if they couldn’t properly explain the purpose of the purchase. And because Bitcoin has a “no value” in the eyes of the government, the notion that these businesses were sending millions of Korean won (or thousands of USD) overseas looks a lot like money-laundering,” explained Cryptonight.
Most importantly, although bitcoin is being traded at a premium rate that is substantially higher than most markets, it is extremely difficult for foreign or external traders to open bank accounts in South Korea. Hence, even if traders securely purchase bitcoin overseas and attempt to sell it on South Korean bitcoin exchanges, they wouldn’t be able to do so without opening South Korean bank accounts that are not easily accessible to foreigners.