According to industry insiders, the funds from South Korean retail investors are driving the price movement of Ethereum and the rise of corporate Ethereum treasury companies. This second-largest cryptocurrency globally is currently trading at just 7% below its historical high.
Samson Mow, CEO of Bitcoin technology company Jan3, stated that the "only factor" maintaining the current level of Ethereum (ETH) prices and Ethereum treasury companies is the approximately $6 billion in South Korean retail funds.
"ETH influencers have been flying to South Korea just to market to retail investors. These investors know nothing about the ETHBTC chart and believe they are buying the next Strategy-style investment," Mow said in a post on X on Monday, warning that this "will not end well."
Upbit and Bithumb are the two main centralized exchanges (CEX) used by South Korean retail traders.
From futures data, according to CoinGlass, Upbit ranks as the 10th largest CEX in Ethereum futures trading, with a trading volume of $1.29 billion in the past week.
Cryptocurrency futures trading typically exceeds spot trading volume, thus having a greater impact on the price of the underlying asset.
The "kimchi premium" of Ethereum—meaning the price of the cryptocurrency on South Korean exchanges is higher than on other exchanges—also indicates a growing demand from South Korean retail investors.
According to blockchain data platform CryptoQuant, the Ethereum kimchi premium rose to 1.93 on Sunday, up from -2.06 on July 16, when the trading price of Ethereum was below $2,959.
This metric measures the price gap of Ethereum between South Korean exchanges and other exchanges.
Marcin Kazmierczak, co-founder of blockchain oracle company RedStone, stated that South Korean retail investors are significant participants in the crypto market, as evidenced by the Ethereum kimchi premium.
However, Kazmierczak noted that this only represents a small part of Ethereum's overall momentum.
Kazmierczak added that Ethereum's strength lies in its "borderless nature," combining participation from South Korean retail and global institutions.
Mow's insights come at a time when many other industry observers are questioning the sustainability of Ethereum treasury companies.
In September, Andrew Kang, founder of Mechanism Capital, criticized BitMine founder Tom Lee's arguments about Ethereum, believing it overestimates the value Ethereum gains from stablecoins and real-world asset (RWA) tokenization.
"The valuation of Ethereum mainly comes from financial illiteracy. Fairly speaking, this can create quite a large market cap," Kang stated in a post on X on September 24, adding that "the valuation derived from financial illiteracy is not infinite."
Kang mentioned that while "broader macro liquidity" has maintained Ethereum's price momentum, it requires "significant organizational change" to avoid "indefinite underperformance."
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