Table of Contents
Over the past week, trade volumes on South Korean exchanges Upbit and Bithumb have declined noticeably, suggesting that retail trading activity in Bitcoin has fallen significantly.
The trades also show a broader risk-off trend, driven by the DeepSeek-led global market sell-off and the tariff drama that started late last week and has continued this week.
The focus now shifts to the escalating trade war between the US and China. Following a relief rally, investors are once again on edge due to tepid trade policies.
The deep sell-off, the reversal, and the losses again in markets within 24 hours reflect the tariff chaos.
Some market watchers see this as a short-term bearish indicator since the premiums of the notorious bitcoin trade that Sam Bankman-Fried popularized have risen to considerable levels amidst a market slaughter driven by escalating trade wars.
Notwithstanding the last-minute delay in US tariffs on Mexico and Canada, the reluctance of a relief rally to sustain raises questions about risk assets.
The turbulence in financial markets came after Donald Trump warned last week that Americans might feel "short-term pain" from an additional 25 per tariff on Mexican and Canadian goods and a 10% tariff on Chinese imports.
The last-minute deal underscores that everything was negotiable under Trump's dealmaking.
Financial markets from Asia to Europe to the Americas have been rattled this week, with the pain felt across asset classes.
The so-called Kimchi premium—the difference between bitcoin prices on Korean exchanges and global bourses—rose slightly more than 10% due to the decline in the OG token over the weekend.
Ashrith Rao
As the prospect of a trade war spooked investors, crypto prices fell on Monday, with Bitcoin hitting a three-week low.
However, the OG token reversed those losses in line with broader risk assets in the green early on Tuesday.
Bitcoin surged over 7% to trade above $101,000 after crashing to a three-week low of about $91,442 over the weekend. At the time of writing, Bitcoin is trading at shy of $98,000.
The smaller cryptocurrency Ether recovered some deep losses after marking its largest three-day fall since November 2022. Its value has lost about 25% since Friday.
Data from CoinGecko showed that almost a quarter of the 100 largest cryptocurrencies lost 20% or more in value on Monday.
In the Kimchi premium narrative, the goal of arbitrage is to make a risk-free profit in Korean won. Arbitrage entails purchasing bitcoin on an international market and selling it on a Korean exchange.
Although South Korea's capital regulations make it difficult to keep profits, the premium is nevertheless a common metric for assessing market mood.
Over the last week, trade volumes on Korean exchanges Upbit and Bithumb have declined noticeably, suggesting that retail trading activity has slowed.
Tether, a dollar-margined stablecoin, has seen its balance fall on both exchanges and has occasionally experienced withdrawal delays.
Blockhead
Trump backed away from his latest threats to start a trade war with America's neighbours. Deals on no US tariffs for Mexico and Canada helped mark a positive step away from the brink, at least for another month.
Markets have been all over the place but going nowhere fast.
Similar to the tariffs, the markets have returned to their initial state. The Trump tariff's on/off switch persists in influencing market movements.
That confirms that delayed deals done to help avoid tariffs are good for risk exposure and growth.
However, the latest news on Mexico and Canada is certainly the glass half full for the crypto market.
The worry is that the can is being kicked down the road. For now, the deal has extended the tariff drama for another month.
But the real question now is: Does Trump have clay feet? And is he blinking after the chaos and deep market sell-off?
The China-US trade war is another example of how this drama plays out, making it difficult for markets and investors to predict the next moves or make a clear bet.
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