[Bitcoin Now] Falls Below 58 Million Won... Plummets Ahead of FOMC

Possibility of Early Tapering End↑... Attention on Base Rate Hike
Bitcoin Magazine "90% of Bitcoin Already Mined"

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] The leading cryptocurrency Bitcoin has fallen below the 58 million KRW mark amid continuous sluggishness. This is interpreted as market anxiety over interest rate hikes ahead of the upcoming U.S. Federal Open Market Committee (FOMC) meeting.

According to the domestic cryptocurrency exchange Upbit, as of 3:18 PM on the 14th, Bitcoin was recorded at 57.7 million KRW, down 1.46% from the previous day. It continues its downward trend after dropping 5.52% from the 62 million KRW range the day before. On the 4th, it had fallen below the 58 million KRW level, recording 56 million KRW.

The cryptocurrency market is shaking ahead of the FOMC. The FOMC meeting, held on the 14th and 15th (local time), is expected to address the early end of tapering. The tapering was originally scheduled to end in June next year but is now anticipated to be moved up to March. An early end to tapering is perceived by the market as an acceleration of the timing for interest rate hikes. After this FOMC meeting, a dot plot reflecting next year's interest rate hike outlook will also be released.

If the base interest rate is raised, liquidity will shrink, making a downturn in the cryptocurrency market inevitable. The cryptocurrency market began to surge against the backdrop of liquidity injected by governments worldwide following the spread of COVID-19. Before governments responded to COVID-19, on March 13 last year, Bitcoin had fallen to 5.48 million KRW. Regarding this, Ryan Payne, CEO of U.S. investment firm Payne Capital Management, said on the 7th, “Bitcoin could rise further due to excessive liquidity,” but also criticized, “It’s just creating a bigger casino.”

Meanwhile, with 90% of Bitcoin reportedly already mined, concerns about a supply shock are emerging. On the 13th, cryptocurrency specialized media Bitcoin Magazine reported, “Of the 21 million Bitcoins limited in quantity, 90% have been mined,” and added, “If the growing demand from large investors such as hedge funds and central banks is not met, a supply shock is inevitable.” Furthermore, it added, “Due to lagging fear, the FOMO phenomenon of urgent buying will continue among institutional investors.”