South Korea’s crypto mania looks to have cooled amid the government’s renewed crackdown on cryptocurrencies and bitcoin‘s price slide.
According to data provided by the South Korea-based analytics firm CryptoQuant, bitcoin’s Kimchi premium, a gauge of retail frenzy in South Korea, has declined to 2% from the lofty 20.6% observed on Sunday.
The Kimchi premium is a widely tracked indicator that measures the spread between bitcoin’s price on Korean exchanges and other venues. The market discrepancy results from South Korea’s capital controls and regulations limiting foreign investors from trading on domestic exchanges.
South Korea announced on Monday a special enforcement period from April to June to target all “illegal activity involving virtual assets”.
The move comes a month after the Financial Services Commission’s (FSC) warned crypto investors to “check the registration status” of exchanges and trade with those that have long-term sustainability.
Aside from regulatory developments, bitcoin’s 25% drop from record highs above $64,000 reached on April 14 may have taken the wind out of frenzied action on Korean exchanges.
The Kimchi Premium turned positive in mid-February and rose sharply in March and early April as bitcoin broke above $60,000 in the days leading to Coinbase’s debut on Nasdaq on April 14.