Bitcoin price fell to a weekly low of $50,600 on February 23, down 5% over the past three days, but a rare buying spree seen on Korean exchanges is providing fresh market insight.
Cryptocurrency exchanges in South Korean markets saw a surge in Bitcoin (BTC) trading this week. Historical trends suggest that this could have a significant impact on Bitcoin’s short-term price performance.
Korean investors are increasing buying pressure amid falling prices
After a rapid 27% uptrend in the first half of February, Bitcoin price has struggled to maintain momentum this week. After hitting a yearly high of $52,985 on February 20, BTC price has now fallen 5% to a new weekly low of $50,600 at the time of writing on February 23.
Earlier this week, crypto.news reported on South Korean political parties advocating crypto-friendly policies favoring ETFs and delaying additional taxes. With Bitcoin price falling, a rare buying trend has emerged among crypto investors in South Korean markets.
However, historical trends suggest that this could further exacerbate Bitcoin’s ongoing price decline.
Bitcoin (BTC) Korean Premium Index vs. Price | Source: CryptoQuant
CryptoQuant's Korean Premium (KP) Index tracks the price difference between South Korean exchanges and other exchanges. Rising values indicate increased buying activity by Korean investors and vice versa.
The KP index rose 400% from 1.03 to 4.54 between February 14 and 23, coinciding with Bitcoin's ongoing price correction.
Historically, there has been a clear correlation between BTC price and the Korean Premium Index. When the KP index rises, indicating increased buying activity among Korean investors, Bitcoin price often experiences downward pressure or a negative correlation.
Bithumb, Upbit, Coinone and Korbit are the leading crypto exchanges in South Korea, known as “The Big Four”. According to a study by Seoulz.com, these platforms host 90% of all crypto assets held by the country's residents
The long-term inverse relationship with BTC prices suggests that fluctuations in the Korean market can influence overall market sentiment and contribute to price volatility in the cryptocurrency ecosystem.
Bitcoin Price Prediction: BTC May Find Support at $48,900
If this rare negative divergence between Bitcoin price and Korean market activity repeats, BTC will likely fall below $50,000. Additionally, institutional demand for BTC is likely to decline further in the coming days as Bitcoin ETF trading halts during the week of February 23rd.
Taking advantage of these critical factors, the bears could make a bold attempt to force a quick decline towards $45,000.
In this scenario, a loss for Bitcoin below the $50,000 support could trigger a free fall towards the 20-day SMA price of $48,942. Given that the general sentiment around crypto markets is still largely bullish, BTC bulls could build a consolidation buying wall at this key support level.
Bitcoin (BTC) price prediction | Source: TradingView
On the other hand, demand for Bitcoin could increase from leveraged, bullish investors looking to head off margin calls at the $50,000 level. In this case, Bitcoin price could see a rebound towards the next significant resistance in the $55,500 area, as shown by the upper Bollinger Band indicator.
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