Boost at a price of $48,900
Bitcoin experienced a decline in price, reaching a weekly low of $50,600 on February 23, marking a 5% decrease over the past three days. However, an interesting trend has emerged in South Korean cryptocurrency exchanges, which could have a significant impact on Bitcoin’s short-term price movement.
Despite the recent drop in price, South Korean investors have been increasing their buying pressure in the market. This surge in buying activity comes after Bitcoin’s impressive 27% upward trend in the first half of February. Since reaching a yearly high of $52,985 on February 20, the price of BTC has fallen by 5% and now stands at $50,600 at the time of writing.
Earlier this week, crypto.news highlighted the support for cryptocurrency policies from South Korean political parties, including the endorsement of ETFs and delays in implementing additional taxes. This has prompted a rare buying trend among crypto investors in South Korean markets, even as the price of Bitcoin continues to decline.
However, historical data suggests that this buying activity could actually worsen Bitcoin’s ongoing price dip. The Korean Premium (KP) Index, provided by CryptoQuant, monitors the price difference between South Korean exchanges and other exchanges. When the index values rise, it indicates increased buying activity among Korean investors, which often leads to downward pressure or negative correlation in Bitcoin’s price.
The leading crypto exchanges in South Korea, known as “The Big Four” – Bithumb, Upbit, Coinone, and Korbit – host the majority of crypto assets held by South Korean residents. These exchanges account for 90% of all crypto assets in the country, according to Seoulz.com research. Therefore, fluctuations in the Korean market can have a significant impact on the broader market sentiment and contribute to price volatility in the cryptocurrency ecosystem.
Looking ahead, if the negative divergence between Bitcoin’s price and the activity in the Korean market continues, BTC is likely to dip below $50,000. Furthermore, with Bitcoin ETFs set to close trading for the week on February 23, institutional demand for BTC is expected to decline further in the coming days. In this scenario, bears may attempt to drive the price down rapidly towards $45,000.
However, given the overall bullish sentiment in the crypto markets, BTC bulls could establish a consolidation buy-wall at the key support level of $48,942, preventing a further decline. On the other hand, Bitcoin could also experience an upswing if leveraged bullish investors enter the market to avoid margin calls at the $50,000 level. In that case, the price of Bitcoin could potentially reach the next significant resistance at the $55,500 area.
Overall, the recent buying frenzy observed in South Korean exchanges amid Bitcoin’s price decline provides valuable insights into the market. The correlation between the BTC price and the Korean Premium Index suggests that fluctuations in the Korean market can have a significant impact on Bitcoin’s price and contribute to overall price volatility in the cryptocurrency ecosystem.
