The price of Ethereum seems to be recovering nicely this weekend after a period of uncertainty among investors. The “king of the altcoins”, after what looked like an aggressive return above the $4,200 level earlier this week, is now lagging below the psychological $4,000 mark.
Although the Ethereum price has built positive momentum over the past day, the shadows of the October 10 downturn still appear to weigh on investor sentiment. A market phenomenon known as the “Kimchi Premium” suggests it’s going to be a nasty few weeks for the second-largest cryptocurrency.
What happened the last time Kimchi Premium saw a similar increase
In a recent post on social media platform X, market analyst CryptoOnchain says revealed that the Kimchi Premium has been on the rise in recent weeks. This observation is based on the movement of the on-chain indicator Korea Premium Index, which measures the price difference between South Korean exchanges and other global exchanges.
This metric, or the “Kimchi Premium,” shows how much additional Korean traders are willing to pay for a given cryptocurrency (in this case, Ethereum). When the index is positive, it means that Korean retailers are willing to pay a premium for the crypto assets. Meanwhile, a negative Korean Premium Index indicates that retailers are only willing to buy the cryptocurrency at a discount.
According to CryptoOnchain, the Korea Premium Index for Ethereum recently saw a notable increase to around 8.2%, the second highest level this year. The market analyst noted that this level of Kimchi Premium is a troubling sign as it historically points to extreme retail FOMO (Fear of Missing Out) and a potential price top.
Typically, whales tend to take advantage of the price difference by selling on Korean exchanges when the Korea Premium Index rises. Due to the increased selling pressure, the Ethereum price is now at greater risk of correction.
For example, the last time ETH saw a Kimchi Premium of this height was in January, which coincided with the price drop to around $1,500. With this in mind, investors should be cautious as the likelihood of a sustained downtrend is significantly higher.
Ethereum price at a glance
At the time of writing, ETH’s price is around $3,875, reflecting no significant change in the past 24 hours. In what was expected to be a bullish period for the cryptocurrency market, ‘Uptober’ hasn’t exactly met investor expectations. After a positive start to the month, the Ethereum price is currently down almost 10%.
