April 27, 2024

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A screen shows bitcoin trading at over 86 million won ($64,470) at local crypto exchange Bithumb's headquarters in southern Seoul, Thursday. Few hours earlier in the day, the price peaked at around 88 million won, reaching its new high. (Newsis)

The price of bitcoin traded in Korea climbed to its highest ever Thursday, fueled by a global rally initiated from spot exchange-traded funds and an impending halving.

Bitcoin, the world’s biggest cryptocurrency, traded in Korea went above 88 million won ($66,000) at around 2 a.m. on Thursday, a few hours after breaking the previous high of 82.7 million won at around 6 p.m. The previous record was set in November 2021.

With the price moving down later in the day, bitcoin was traded at 86.59 million won as of 1:30 p.m. at local crypto exchange Bithumb, marking some 3 percent rise from its price 24 hours before. At another crypto exchange Upbit, it was traded at 86.88 million won, up nearly 10 percent.

Yet on the global market, bitcoin was yet to reach its previous high. Bitcoin is usually traded at a higher price in Korea than the world average due to strong local demand.

According to the US-based crypto exchange Coinbase, bitcoin was traded at $61,672 at 1:30 p.m., more than 10 percent lower than the previous record set at $68,789 in November 2021.

The rapid ascent of bitcoin is assessed to have stemmed from a strong inflow of spot bitcoin ETFs that directly hold the cryptocurrency, after the US Securities and Exchange Commission’s approval which came last month.

The rise in transaction volume of related ETFs during market hours lead to an increased demand for bitcoin spot trading in the over-the-counter market.

Another reason behind the bull’s run is the expectation that the “halving” event -- when bitcoin reduces the number of new coins earned by miners -- is near. The drop of new bitcoins into circulation makes the crypto asset more attractive.

Along with bitcoin, the price of ethereum has been surging, too. It was traded at 4.8 million won on Bithumb and 4.82 million won on Upbit, up around 3-6 percent higher than the prices from 24 hours before.

"As it has not been long since the spot ETF products were launched, the inflow of funds could surpass that of market expectations," analyst Hong Song-uk from NH Investment & Securities said.

Hong further projected that the uncertainties in US politics could further strengthen the value of bitcoin, mentioning the US Congress and the upcoming US presidential election.

"The noises associated with the US government's finance and credibility could highlight the value of bitcoin," he said.

By Im Eun-byel (silverstar@heraldcorp.com)