Cryptocurrency Plummets Consecutively... Youths Say "Hope to Recover at Least the Principal"
Coin Community Sighs Over Interest Rate Hike Concerns on 'All-In Loan Investments'
Government to Supervise Cryptocurrencies... Focused Management of Coin Exchanges
On the morning of the 28th, Bitcoin is being traded in the 45 million won range at domestic cryptocurrency exchanges. [Image source=Yonhap News]
[Asia Economy Reporter Han Seung-gon] "It really seems to be over now." , "Some people even invested with loans taken out by borrowing to the max..."
As cryptocurrency prices continue to plummet day after day, deep sighs are spreading among young people in their 20s and 30s. After extreme price volatility and a large drop, many expected an upward trend, but the situation remains negative. Some even took out 'maxed-out loans' to invest in coins, deepening their worries along with the possibility of interest rate hikes. Some young people are turning their attention to stocks instead of the highly volatile coin investments.
According to the cryptocurrency exchange Bithumb on the 30th, Bitcoin prices plunged to the 40.5 million KRW range around 9 a.m. that day before rebounding. It rose about 2% compared to 24 hours earlier. However, this rebound cannot be seen as a sign that cryptocurrency price volatility has settled for the time being.
According to CNN on the 28th (local time), Bitcoin prices have plummeted more than 36% so far this month, marking the largest monthly drop since September 2011. According to foreign media, if the current downward trend continues, it will record the largest drop in nearly 10 years as of May.
Kim, a man in his 30s who works and invests in cryptocurrency, said, "When there is a sharp drop, there is usually an upward trend, but it just doesn't seem to rise at all," adding, "It's practically too difficult to predict coin prices, so I'm at the stage of just giving up." He continued, "Once some of the principal is somewhat recovered, I plan to quit coin investment."
Lee, a man in his 20s working at a company, said, "I made a lump sum through part-time jobs and invested in coins, but I lost almost everything," sighing, "I hardly caught any upward trend; the sharp drops kept continuing." He said, "I'm considering relatively safer stock investments."
On the morning of the 24th, when the sharp decline of cryptocurrency continued, the Bitcoin price was displayed on the monitor at Bithumb Gangnam Center in Gangnam-gu, Seoul. [Image source=Yonhap News]
In this situation, young people who invested in coins through 'maxed-out loans' are deeply worried to the point of losing sleep. On the 27th, Lee Ju-yeol, Governor of the Bank of Korea, hinted at the possibility of raising the base interest rate within the year. If interest rates turn upward, loan interest rates will immediately rise due to the base rate hike, and interest costs on credit loans or card loans are likely to increase significantly. For young people who invested in coins with borrowed money, this is nothing short of a bolt from the blue.
Park, a man in his 30s working at a company, said, "Looking at coin-related communities, there are many posts saying they invested in coins with loans but lost almost all their money," adding, "In such cases, they literally become debtors, which must be really frustrating."
As young people's sighs and worries deepen, the government has taken steps to respond to cryptocurrency issues. First, it designated the Financial Services Commission (FSC) as the main supervisory authority. The FSC plans to establish related organizations and reinforce personnel. Additionally, the FSC announced its intention to closely manage the mushrooming coin exchanges through the 'Act on Reporting and Using Specified Financial Transaction Information.'
However, the government maintains the stance that "cryptocurrency is not a financial product," so while it manages cryptocurrencies, it is uncertain whether investor protection can be institutionally established.
On the 26th, Eun Sung-soo, Chairman of the Financial Services Commission, met with reporters after the 'Korea Fintech Week 2021' event held at Conrad Seoul in Yeouido and said, "We have clearly stated that cryptocurrency price fluctuations are not something we can protect," adding, "However, regarding whether customers' deposited funds are protected, the amended Special Financial Transactions Information Act has been in effect since March." He emphasized, "Cryptocurrency exchanges registered under the Special Financial Transactions Information Act naturally protect investment funds."
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