South Koreans Are Going Cryptocurrency Crazy
Much has been discussed about how cryptocurrency mania has taken over the mainstream population. There are stories of wide ranges of people suddenly investing in the markets.
However, there is one country where this is particular substantial, South Korea.
This is evident from a recent survey by an online Jobs portal on a sample of 941 salaried employees in South Korea. It asked whether the respondents had invested in any cryptocurrencies.
What they found was that at least 31% of the respondents said that they had invested some money in the cryptocurrency markets. The average amount invested in these markets was about 5.66m Korean Won ($5,200).
Of those who had invested, 44.1% of them had invested less than 1m Won. There were another 18.3% who had invested up to 2 million and a further 13% who had invested more than 10 million.
Perhaps slightly more troubling was the reasons given by the repondents for the investments.
At least 54.2% of them had claimed that this was because they wanted to make a lot of money in a short period of time.
One cannot blame the reasons given by the respondents though. When asked whether the investments had made any money, about 80% claimed that this was indeed the case.
Of those who made money, there were about 19.4% who claimed that the returns that they were able to acheive was over 100%.
That cryptocurrencies are so popular in South Korea is no surprise. The price of Bitcoin is usually trading at a significant premium on South Korean exchanges as compared to other Western Markets.
For example, currently the price of Bitcoin on BitHump is about $19,377 compared to the price on Bitfinex which is $15,315. This is over a 26% premium.
Local traders in South Korea have no qualms about paying this premium for the coins. In fact, it is often called the "kimchee" premium. Kimchee is a popular dish in South Korea.
This premium actually increased to record levels in the recent Bitcoin sell off. This was mainly because although traders in the West were selling coins, those in South Korea were not. The price remained relatively stable.
The Government Takes Note
Of course, the government has been taking note of the amount of people who have invested in the cryptocurrency markets.
They are becoming increasinly worried about the affect that a crash in the cryptocurrency markets may have on the savings of people who have invested. People from simple students to pensioners have been buying coins.
There have also been rumours that the government may consider outlawing certain activities that were linked to digital currencies. The details are still uncertain but the intention seems to be there.
Irrespective of the rules that the government will put in place, investors in the country should approach cryptocurrencies with the same caution that they do other investments.
The markets are really volatile and a large fall in the price of cryptocurrencies is possible and according to some, probable.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.