[Bitcoin Now] Powell Turns Hawkish... Weakness at 70 Million Won Level

Fed Chair Powell Acknowledges Inflation Pressures Are Not Temporary
Cryptocurrency Market Concerns Over Liquidity Reduction

[Image source=EPA Yonhap News]

[Asia Economy Reporter Gong Byung-sun] Bitcoin, the representative cryptocurrency, is hesitating around 70 million KRW due to the hawkish stance of Jerome Powell, Chairman of the U.S. Federal Reserve (Fed). A hawkish stance refers to a tendency to prefer tightening measures such as raising the benchmark interest rate when there are signs of economic overheating.

According to Upbit, a domestic cryptocurrency exchange, as of 1:55 PM on the 1st, Bitcoin recorded 70.68 million KRW, down 0.03% from the previous day. It rose to 73.3 million KRW at 12:31 AM but has been declining since then. Although it recorded 70 million KRW the day before, it did not fall below the 70 million KRW mark.

Powell's remarks appear to have influenced Bitcoin's price. According to U.S. economic media CNBC on the 30th (local time), Powell said at the U.S. Senate Banking Committee, "Because inflationary pressures are currently high, we will consider ending asset purchase tapering early at the December meeting."

Initially, tapering was expected to begin around June next year. However, according to Powell's remarks, tapering could start as early as spring next year. The Fed has been injecting money into the market by purchasing at least $120 billion (about 141 trillion KRW) worth of government bonds and mortgage-backed securities (MBS) every month.

Furthermore, Powell acknowledged that inflationary pressures are not temporary. He said, "Tapering should not be interpreted as a signal that interest rate hikes are imminent," but also added, "It is a good time to abandon the word 'transitory' regarding inflation and clearly explain what the Fed means." Until now, Powell had eased liquidity by saying inflation was transitory. However, by acknowledging that it is not temporary, he implied the necessity of tightening.

Bitcoin prices began to rise after the COVID-19 pandemic as governments around the world injected liquidity. Although it fell to 590,000 KRW on March 12 last year, it surged to about 60 million KRW within a year. Since then, whenever signs of tapering or interest rate hikes appeared, the cryptocurrency market has been shaken. On the 22nd of last month, when Powell accepted his reappointment as chairman and stated his intention to prevent inflation from becoming entrenched, Bitcoin fell by 3.36%.