[Bitcoin Now] Hesitating Around 51 Million Won... Attention Focused on 'Powell's Words'

Hearing for Jerome Powell Fed Chair Nominee Scheduled for the 11th
Beige Book Released on the 12th... January FOMC Regular Meeting to be Held on the 25th-26th

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] The leading cryptocurrency Bitcoin is hesitating around the 51 million KRW mark. It is expected that Bitcoin prices will fluctuate again depending on the upcoming schedule of the U.S. Federal Reserve (Fed).

According to the domestic cryptocurrency exchange Upbit, as of 1:49 PM on the 10th, Bitcoin recorded 51.97 million KRW, up 0.57% from the previous day. It slightly rebounded to 52.6 million KRW the day before but is showing signs of hesitation. Since the beginning of this month, Bitcoin has continued its bearish trend, falling by 10.86%.

The recent sluggishness is due to concerns over liquidity tightening by the U.S. Fed. On the 5th (local time), the Fed released the minutes of the Federal Open Market Committee (FOMC) meeting held last month. According to the minutes, most FOMC members predicted that conditions for interest rate hikes would be met this year, and some argued that rates should be raised immediately after the end of asset purchase tapering.

Quantitative tightening was also mentioned. Quantitative tightening refers to the policy of not reinvesting in bonds held when they mature, thereby withdrawing liquidity. It is known as a stronger tightening policy than tapering. If quantitative tightening is implemented, it is expected to impact the cryptocurrency market, which had risen along with increased liquidity since COVID-19.

The upcoming schedule also poses a burden on the cryptocurrency market. On the 11th, Jerome Powell, the Fed Chair nominee, will attend a confirmation hearing. Since the FOMC minutes have already indicated the Fed’s monetary policy direction, it is expected that he will make hawkish remarks during the hearing. A hawk refers to a tendency to prefer tightening policies when the economy overheats.

Powell’s remarks have influenced the cryptocurrency market since his tenure as Chair. On November 30 last year, he attended the U.S. Senate Banking Committee and hinted at the possibility of an early end to tapering. Since then, the cryptocurrency market has shown a downward trend. Last month, Bitcoin fell by 19.77%.

On the 12th, the Fed is scheduled to release the Beige Book. The Beige Book is a report on economic conditions in the 12 Fed districts in the U.S. and is the most referenced material when the Fed decides short-term interest rates. Two weeks after the Beige Book release, the January FOMC regular meeting will be held on the 25th and 26th. Since Fed officials have already warned of interest rate hikes, investors are focusing on whether the FOMC members will make hawkish remarks.