[Bitcoin Now] Plummeting to 73 Million Won Amid Bubble Controversy and Regulatory Concerns

Bubble Theory Triggered by Dogecoin... Drop to Just Before 70 Million KRW
US Authorities Begin Moving to Regulate Cryptocurrency

On the 19th, the price of Bitcoin is displayed on the electronic billboard at Upbit Lounge in Gangnam-gu, Seoul.
[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] As concerns arose that a bubble began to form in the cryptocurrency market before and after the listing of Coinbase, the largest cryptocurrency exchange in the United States, and with the possibility of regulation by the U.S. Treasury Department emerging, the leading cryptocurrency Bitcoin plunged to the 73 million KRW range.

According to the domestic cryptocurrency exchange Upbit, as of 2:58 p.m. on the 19th, Bitcoin recorded 73.37 million KRW, down about 3% from the previous day. It surpassed 80 million KRW on the 13th, buoyed by the news of Coinbase's Nasdaq listing, but has since shown a decline for six consecutive days. It even fell to 70.92 million KRW at one point the previous day.

This appears to be due to the bubble theory that Bitcoin's price is excessive. The rise of 'Dogecoin' was the starting point. Dogecoin, which has neither technical value nor ongoing projects, surged 352.28% over the past week. This was influenced by Tesla CEO Elon Musk mentioning Dogecoin on Twitter on the 15th. On the 16th, Scott Knapp, Chief Strategist at U.S. insurer CUNA Mutual Group, pointed out in an interview with U.S. economic media Bloomberg that "the rise of altcoins such as Dogecoin means that the current cryptocurrency market is similar to the past dot-com bubble." The dot-com bubble refers to the overvaluation of internet-related companies in 2000, which inflated stock prices.

The possibility of regulation by the U.S. Treasury Department was also raised. According to CNBC on the 18th, rumors began circulating on social networking services (SNS) that the U.S. Treasury would soon regulate financial institutions to investigate money laundering related to cryptocurrencies. Although U.S. Treasury Secretary Janet Yellen hinted at cryptocurrency market regulation since January, this is the first time news has emerged that actual action is being taken. The U.S. Treasury did not respond to CNBC and CNN's requests for confirmation of the related facts. CNN explained that the sharp drop based on rumors alone indicates instability in the cryptocurrency market.

Meanwhile, the 'Kimchi Premium,' which shows the price difference of Bitcoin between domestic and overseas markets, is increasing, raising the possibility of further sharp declines. As of 10:30 a.m. that day, Bitcoin was trading at $56,908 (approximately 63.7 million KRW) on the overseas cryptocurrency exchange Binance, recording a Kimchi Premium of 20.11%. This means a difference of over 13 million KRW compared to the domestic Bitcoin price. In the cryptocurrency market, the Kimchi Premium is regarded as a precursor to a crash. Cryptocurrency specialized foreign media Coindesk analyzed that if a correction occurs due to the Kimchi Premium, buying pressure in the East Asian region decreases, affecting the global cryptocurrency market. According to the cryptocurrency analysis site Coinhills, as of that day, South Korea and Japan ranked 3rd and 4th in global Bitcoin trading volume, respectively.