Coin Metrics: Are There Regional Preferences in Cryptocurrency Trading?
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Coin Metrics: Are There Regional Preferences in Cryptocurrency Trading?
Cryptocurrency has no borders, but exchanges do.
Navigating Web3 tides with focused insightsAuthor: Victor Ramirez, Coin Metrics
Translation: Luffy, Foresight News
Key Takeaways:
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The "Kimchi premium" reemerged during a brief period of political turmoil in South Korea. At its peak, Bitcoin traded close to $115,000.
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Cryptocurrency trading shows strong regional differences across exchanges and assets.
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Since the beginning of this year, on-chain activity for established altcoins has surged significantly—particularly tokens that are primarily traded in Asia and have become targets of enforcement actions by the U.S. Securities and Exchange Commission (SEC).
Introduction
Broadly speaking, cryptocurrency is considered a borderless, always-on market. While the underlying technology of crypto indeed operates independently of geographic location, markets remain sensitive to regional patterns, regulatory regimes, and local user preferences around the world.
In this week’s State of the Network, we use the South Korean market as a case study to explore the regional and geographic characteristics of cryptocurrency trading activity. Using timezone data, we observe localized behaviors across multiple crypto exchanges and assets. Finally, we provide an update on current on-chain activity across various altcoins.
Capital Controls Fuel the Kimchi Premium
The "Kimchi premium" offers an interesting example of unique market behavior occurring in specific regions. It refers to the price difference between cryptocurrencies traded in South Korea versus the global “reference” price. The Kimchi premium arises mainly due to high domestic demand for crypto assets within a closed market environment, combined with years of strict regulation that reduce market efficiency by making international arbitrage difficult.
While apparent arbitrage opportunities may exist, local regulations make it hard for foreign individuals and institutional investors to capitalize on them. Capital controls on the Korean won restrict fiat inflows and outflows from Korean exchanges. By law, only South Korean nationals or foreign residents holding residency permits can trade through Korean exchanges. Meanwhile, overseas exchanges face stricter oversight compared to domestic ones. Koreans who wish to trade on foreign platforms must first buy crypto on a domestic exchange before transferring it abroad. These conditions collectively limit capital mobility within the system.
Finally, banking channels result in delayed responses to any arbitrage opportunity. Transferring funds between banks and exchanges can take several hours—or even up to a day—by which time the arbitrage window may have already closed.
The Kimchi premium has been well-documented throughout crypto history and began drawing attention at the end of 2017.
Source: Coin Metrics
During the peak of the 2017–2018 bull run, the Kimchi premium persisted consistently. Sparse market liquidity at the time led to significant spreads. Notably, Alameda Research, the sister trading firm of FTX, began exploiting this regulatory arbitrage starting in 2017 and became one of the largest crypto trading firms at its height.
Source: Coin Metrics
During the 2021 bull market, we observed the Kimchi premium again, though less intense and less frequent than in 2017. Upbit’s KRW-Bitcoin market experienced volatile swings, with a discount reaching 12.5% during the flash crash in May 2021.
Source: Coin Metrics
Markets have grown steadily over time, and the Kimchi premium has largely disappeared—though with notable exceptions. The phenomenon even pushed Bitcoin prices above $100,000 on certain Korean exchanges, about two weeks before Bitcoin surpassed $100,000 globally. On December 3, when South Korean President Yoon Suk-yeol declared martial law, the Kimchi premium returned. According to Coin Metrics’ one-minute reference rate, the premium peaked at 20%, with Bitcoin approaching $115,000.
Although the Kimchi premium is now widely recognized, strict capital controls prevent overseas investors from easily accessing the Korean market. This makes the market vulnerable to liquidity shocks and subsequent price instability.
Cryptocurrency Trading Shows Strong Regional Patterns
Regionalization of Crypto Exchanges
Despite blockchains being permissionless by nature, crypto exchanges remain essential intermediaries for most market participants. While the crypto market is global, each exchange must comply with local regulations to serve users in a given country. Given differing regulatory landscapes worldwide, trading activity tends to concentrate in several key geographic regions. Very few exchanges operate truly without borders.
We can leverage knowledge of these local legal constraints, known regional user preferences, and market-derived metrics to understand how trading activity is distributed globally. The chart below shows the share of trading activity for specific exchanges across different time zones.
Each row represents an exchange, and each column shows the spot trading volume during peak hours (9 AM to 5 PM) in a given time zone. Each cell reflects the average trading volume of an exchange in that time zone relative to its overall hourly average. The final column displays the average hourly trading volume for each exchange. For example, Binance sees 12.1% less volume during East Asian hours compared to its average of $802 million per hour, but 19.4% more volume during European hours.
Source: Coin Metrics
As expected, Korean exchanges Bithumb and Upbit, along with Japanese platforms Bitbank and Bitflyer, show higher trading volumes concentrated in East Asian hours. Upbit operates only in East Asian markets such as South Korea and Singapore. In practice, it is illegal for anyone in the U.S. to trade on Upbit. Assuming negligible trading activity from non-East Asian users on Upbit, we can treat trading outside East Asian hours as baseline off-peak activity.
Due to overlap between European and U.S. time zones, distinguishing region-specific activity can be challenging—but clear patterns still emerge. Kraken, a U.S.-based exchange, actually sees slightly more activity during EU hours than U.S. hours.
Overall, most exchanges remain heavily dependent on U.S. trading hours. Coinbase, Gemini, and Crypto.com show the strongest preference for U.S. trading times, at 36.1%, 57.3%, and 37.1% respectively. Interestingly, Bullish is not legal in the U.S., yet exhibits a strong preference for Eastern Time (38.6%).
Regionalization of Asset Trading
Source: Coin Metrics
We can apply the same methodology to asset-level trading volumes across all exchanges. Similar to exchange breakdowns, most asset trading remains concentrated in EU/U.S. hours. Bitcoin, Ethereum, and USDC are particularly aligned with U.S. trading hours.
In contrast, Ripple, Tron, Stellar, and Cardano perform better during East Asian hours. South Koreans have shown strong interest in XRP, while Tether on Tron is the most widely used stablecoin in Asia.
Timezone analysis is inherently limited by longitude, so we cannot rely solely on it. We also incorporate known user preferences. Reports such as Bitso’s Crypto Landscape in Latin America and Castle Island Ventures’ Stablecoins: The Emerging Market Story indicate that Latin American residents strongly prefer stablecoins—especially Tether—as an attractive and stable alternative to inflation-prone local currencies. On the other hand, Tether's solvency has come under scrutiny from U.S. regulators, although it remains compliant and continues serving U.S. users. While USDT activity appears centered in U.S. hours, much of its trading volume may originate from South America rather than North America.
We can go further and examine on-chain transfer values directly.
Source: Coin Metrics
The results in the table above align with what we learned from our previous article, where we observed distinct time preferences in on-chain activity for several assets. On-chain transfer values for Bitcoin, Ethereum, and USDC favor EU/U.S. hours, consistent with trading volume trends.
Tether’s on-chain activity differs slightly from its off-chain (exchange-based) activity. USDT’s on-chain activity peaks noticeably during EU hours (+46.4%), compared to +17.8% for exchange-based activity. During U.S. hours, Tether shows a +15.5% deviation on exchanges but a -5.6% deviation on-chain.
This aligns with our observations in the article From East to West: the Global Pulse of Stablecoin Transactions, highlighting regional disparities in stablecoin usage.
On-Chain Activity: The Comeback of Legacy Altcoins
Legacy altcoins from 2017 and 2021 have seen sharp price increases in recent weeks. XRP, TRX, ADA, and XLM have performed well—but does rising price correspond with increased on-chain activity?
We examined on-chain metrics for these networks and compared performance across different blockchains. Since blockchains account for transactions differently, we standardized the on-chain metrics using percentage growth since the start of 2024.
Source: Coin Metrics
Overall, network activity has increased across several chains. When measuring transaction count and active addresses, Ripple (XRP) saw the largest increase in activity. We also observed rising transaction volumes on Cardano (ADA) and Tron (TRX). There are notable commonalities among the assets showing the biggest gains in both price and on-chain activity:
As seen above, these tokens exhibit strong regional preferences in East Asia, unlike Bitcoin and Ethereum. Many are currently classified as securities by the U.S. Securities and Exchange Commission (SEC).
Traders may be anticipating a broadly favorable regulatory environment under a potential Trump administration. Paul Atkins, recently appointed as SEC chair, is perceived as "crypto-friendly." Of course, when Gensler was first appointed, the crypto industry thought he would be friendly too.
Conclusion
In this report, we highlighted how cryptocurrency markets behave differently across the globe. Local regulations—such as those in South Korea—tightly control capital flows, leading to price distortions. Timezone analysis helps clarify market preferences for certain trading venues or assets in specific regions. Overall, the collective preferences of global market participants shape the broader crypto economy. Understanding the nuances of each market worldwide will support continued global adoption of cryptocurrency.
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