Russians pay up to $20,000 above market rate to buy Bitcoin

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Media DeFiprime.com noted that Bitcoin is trading up to $20,000 above the market rate on Russian exchanges.

DeFiprime.com jokingly called it the “matreshka bounty,” as a spin on the kimchi bounty, which had been a widespread phenomenon since around 2016.

“Matreshka”, or the matryoshka doll, are brightly painted wooden dolls of decreasing size nested one inside the other. It is perhaps Russia’s best-known symbol, representing respect for the elderly, family unity, fertility, abundance, and the search for truth and meaning.

Although “matreshka premium” does not have the same ringtone as kimchi premium, both exist for similar reasons.

Blast from the Past: Premium Kimchi

The kimchi premium is a term used to describe the price difference between tokens on Korean exchanges compared to the rest of the world. The most significant difference was mainly seen in Bitcoin.

Since the fermented cabbage dish is a Korean staple, what better way to represent this situation?

Around 2016, North Korean leader Kim Jong-un was increasing tensions in the region, including by testing missiles. Incidentally, missile launches resumed in 2022, indicating a return to hostilities.

This led to capital controls limiting the flow of money into and out of Korea. The resulting difficulties in moving money led to pending demand and a temporary increase in cryptocurrency prices.

“An increase in the kimchi premium may be an indicator of increased retail investment in Bitcoin by Korean investors.”

At the height of the kimchi premium, Bitcoin was trading up to 50% above the market rate. Although it still exists today, it is much less widespread, coming around 5%.

Bitcoin Goes Higher Against Expectations

Similarly, tensions between neighboring Russia and Ukraine erupted into war last week. The resulting sanctions excluded some Russian banks from the SWIFT global payment network.

Since then, the ruble has fallen to record lows against the dollar, with 1 ruble currently worth $0.01. In response, the Russian central bank raised rates to 20% in an effort to counter hyperinflationary pressures.

dollar ruble rate
Source: xe.com

The BTC/ruble pair saw the highest trading volume since last May. Clara Medalie, head of Kaiko Research, said the Bitcoin hryvnia and ruble trading pairs saw increased activity “bigger” than BTC/USD.

And with the fact that a “bonus matreshka” exists, it is clear that many Russians consider Bitcoin a safer bet than the ruble.

Bitcoin - ruble volume
Source: bloomberg.com

The outbreak of war last week sent Bitcoin down to $34,300. But a strong performance on Monday saw an 18% rise to close the day at $43,000.

Despite last week’s pullback, the Bitcoin safe haven narrative remains intact.

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