Refer Report
Bitcoin plummeted by about 7% in one hour on the morning of the 28th of last month. Bitcoin, which was trading at 83,488,000 won in Korea at around 6 am that day, fell to 80,121,000 won at around 7 am. It fell by 4.03% in one hour. In the global market, it fell by more than 7% compared to 24 hours ago at the same time, falling to $58,116. The reason for Bitcoin’s plunge has not been clearly revealed, but the market speculates that ‘whale’ investors, referring to large investors, sold off a large amount of Bitcoin.
Bitcoin is not finding its upward momentum. It recovered to the 80 million won range after ‘Black Monday’ on the 5th of last month, but there is a series of negative news such as the sudden rise of Vice President Kamala Harris, the Democratic presidential candidate, and the sudden sell-off. It is expected that the interest rate cut by the US Federal Reserve and the election of former President Donald Trump, the Republican presidential candidate, will affect the Bitcoin price trend in the second half of the year.
Bitcoin trapped in a box
According to Upbit, a domestic cryptocurrency exchange, Bitcoin fell to 77,883,000 won on the 5th of last month, but recovered to 86,254,000 won on the 25th, 20 days later. After that, it fell to 79,550,000 won at one point. It is currently being traded in the early 80 million won range. In the global market, it fell to $49,842 on the 5th of last month, but is currently being traded at around $59,000.
One of the factors that will have the greatest impact on Bitcoin prices is the Fed’s interest rate cut. This is because when the base interest rate goes down, the price of Bitcoin, a risky asset, usually goes up. However, there is analysis that Bitcoin is not turning upward as expectations of the Fed’s interest rate cut have already been reflected in the market and uncertainty in the macroeconomic environment is increasing.
On the 30th of last month, the U.S. Department of Commerce announced that the gross domestic product (GDP) in the second quarter increased by an annualized rate of 3.0% compared to the previous quarter. This was an indicator that the U.S. economy was strong. It was evaluated that the Fed’s expectations that the U.S. economy would succeed in suppressing inflation without a recession were met. The number of new unemployment insurance claimants announced by the U.S. Department of Labor was 231,000 on a seasonally adjusted basis, a decrease of 2,000 from the previous week. Concerns that the job market would freeze have also eased. With economic indicators that are better than expected, attention is being paid to what effect this will have on the Fed’s decision to cut interest rates. Bitcoin briefly rebounded to the $60,000 range in the global market on this day, but then fell back to the $59,000 range.
What impact will it have on the US presidential election?
The market is paying attention to the results of the US presidential election in November as a major variable that will determine the Bitcoin price in the second half of the year. Former President Trump has declared himself the “Bitcoin President.” Former President Trump is raising his voice, saying, “I will make the United States the cryptocurrency capital of the world.” On the other hand, Vice President Harris is considered to be unfriendly to cryptocurrency. Quinn Thompson, founder of virtual asset hedge fund Lacquer Capital, said, “The Bitcoin price, which moved in line with former President Trump’s political situation, is no longer affected much,” and “Since Vice President Harris became the Democratic candidate, virtual asset investors are no longer expecting a pro-virtual asset administration.”
Some are optimistic because the price of Bitcoin has historically rebounded before and after the US presidential election. According to Bitbinex, a Hong Kong-based cryptocurrency exchange, Bitcoin plunged before the election in 2016 and 2020, but rebounded significantly after the election. Two months before the 2020 presidential election, Bitcoin plunged 16% from $12,000 to $10,000. After the election, it rose 320% in about 160 days. In the 2016 presidential election, Bitcoin plunged more than 30% from $750 to $500. After the election, Bitcoin rose more than 2,000% in about 400 days. However, there is a strong counterargument that this year, the same pattern will not be observed because macroeconomic variables are greater than ever.
Wealthy people continue to invest in Bitcoin
Among cryptocurrencies, the wealthy prefer Bitcoin. According to Bithumb, 89% of the top 800 asset holders on Bithumb (as of August 29) held Bitcoin. This was followed by Ethereum (81%), Ripple (64%), Ethereum Classic (44%), and Tron (39%). Of these, 11% bought new Bitcoin. One in ten wealthy individuals bought additional Bitcoin despite Bitcoin’s sideways movement.
The number of Bitcoin millionaires has increased rapidly this year. According to Business Insider, the number of Bitcoin millionaires worldwide was 88,200 in the first half of this year. This is an increase of about 111% compared to the same period last year.
The rise in Bitcoin millionaires is due to Bitcoin’s surge of more than 40% this year. By Jo Mi-hyeon
Graphics = Reporter Lee Jeong-hee mwise@hankyung.com
Source: Korean