The South Korean won fell to a 17-year low near 1,511 per dollar as escalating tensions around Iran pushed investors into safe-haven assets.
Despite the dollar’s strength, tether traded about 0.5% below the spot dollar rate on major Korean exchange Upbit, marking a rare reversal of the kimchi premium.
The shift reflects declining crypto demand as retail investors move into physical dollars and dollar-denominated assets rather than stablecoins during heightened geopolitical uncertainty.
Historically, Korean traders have paid a premium for USDT during periods of currency weakness and market volatility, using it as a proxy to access dollar exposure and rotate into digital assets.
This time, however, rising oil prices and inflation risks linked to the Iran conflict, alongside foreign equity outflows, have driven a broader flight to safety that bypasses crypto markets entirely.
The unusual discount in USDT suggests digital asset markets are not benefiting from the same safe-haven flows supporting the US dollar, highlighting a divergence between traditional finance and crypto behaviour.
With geopolitical tensions unresolved and pressure on the won continuing, the breakdown of the kimchi premium signals a shift in Korean retail sentiment away from speculative trading towards capital preservation.