[Bitcoin Now] Volatile Prices... Did US GameStop Retail Investors Also Join In?

Bitcoin Rises 11% in One Hour to 35-40 Million KRW
Analysis Suggests US Retail Investors Engaged in 'Short Selling War' with Hedge Funds
Binance User Registrations and Trades Hit Record High on 29th Last Month

[Image=Getty Images Bank]

[Asia Economy Reporter Gong Byung-sun] Bitcoin, the representative virtual currency (cryptocurrency) that recently rose to the 40 million KRW range, has fallen to the 36 million KRW range. The cryptocurrency market seems to be shaken by a single comment from Elon Musk, CEO of Tesla.

According to the domestic cryptocurrency exchange Upbit, as of 2 PM on the 1st, Bitcoin recorded 36,861,000 KRW, down about 0.8% compared to 24 hours earlier. It had risen to 41,072,000 KRW on the 29th of last month but dropped to 35,938,000 KRW at 9:25 AM that day.

Every time Elon Musk mentions Bitcoin, the volatility of the cryptocurrency market increases. On the 29th (local time), he said on Twitter, "In retrospect, Bitcoin is an inevitable existence." As a result, Bitcoin rose about 11% within just one hour on the 29th of last month, reaching 40,701,000 KRW as of 6:20 PM.

Elon Musk influenced not only Bitcoin but also other cryptocurrencies. On the 29th of last month (local time), he posted on Twitter a photo combining a dog and the cover of the fashion magazine Vogue, referring to Dogecoin, which was popular on the US online community Reddit. Subsequently, Dogecoin recorded 70 KRW as of 3:20 PM on the 29th of last month, rising about sixfold compared to 24 hours earlier.

However, the price fell again shortly after. On the 30th of last month at 6:20 PM, Bitcoin dropped to 37,791,000 KRW, breaking the 40 million KRW level. Dogecoin also fell to about 36 KRW at 6:50 PM on the 29th of last month, a 48% drop in just over three and a half hours.

There is an interpretation that volatility increased as individual investors who led the sharp rise in GameStop stock moved to the cryptocurrency market. Bloomberg reported on the 29th (local time) that when stock trading platforms like Robinhood blocked trading of GameStop shares, investors flocked to the cryptocurrency market. Previously, individual investors had concentrated on buying GameStop stocks and call options to counter hedge funds and other short-selling entities, causing the stock price to soar. Craig Erlam, senior market analyst at UK financial institution OANDA Europe, analyzed in an interview with Bloomberg on the same day, "There is an overlap between people who bought GameStop stock and those who bought Bitcoin."

In fact, according to Bloomberg, the overseas cryptocurrency exchange Binance temporarily suspended withdrawals on the 29th of last month (local time) due to a surge in transaction volume. Changpeng Zhao, CEO of Binance, said in an interview with Bloomberg that day, "User registrations and transaction volumes hit record highs," adding, "Dogecoin was completely sold out."