[Bitcoin Now] Decline Amid US Interest Rate Hike and European Regulatory Moves

[Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] Bitcoin prices are falling as the U.S. Federal Reserve (Fed) is set to raise the benchmark interest rate at this week’s Federal Open Market Committee (FOMC) meeting, and the European Parliament prepares to vote on a bill banning the use of proof-of-work cryptocurrencies.

According to the domestic cryptocurrency exchange Upbit, as of 10:45 a.m. today, the price of Bitcoin recorded 47.45 million KRW, down 0.12% (58,000 KRW) from the previous day. At the same time, the aggregated price on the global cryptocurrency market tracking site CoinMarketCap showed a 2.51% decrease from the previous day to $38,113 (approximately 47.16 million KRW).

Bitcoin prices had been in the 48 million KRW range until the previous day. However, news that the Fed is likely to raise interest rates at the FOMC meeting on June 15-16 (local time) led to a decline in the U.S. stock market, causing a concurrent downturn in Bitcoin prices. The rate hike is expected to be around 0.25 percentage points.

Additionally, the European Parliament’s inclusion of a ban on proof-of-work cryptocurrencies in the MiCA bill is cited as another factor driving the decline. Proof-of-work refers to mining cryptocurrencies through computer calculations, which has been criticized for causing environmental issues. Bitcoin and Ethereum are mined using this method. However, Ethereum is currently transitioning to a proof-of-stake system, which distributes rewards proportionally to holdings. The vote on this bill is scheduled for today (local time).

Trading volume is on the rise. According to CoinMarketCap, Bitcoin’s 24-hour trading volume increased by 22.3% from the previous day to $18,268,940,313 (approximately 22.6115 trillion KRW).

Meanwhile, as of 10:54 a.m. today, the Digital Asset Fear & Greed Index operated by Dunamu, the operator of Upbit, recorded 39.73, indicating a 'Fear' stage. This is a 0.6 increase from 39.13 (Fear) the previous day. Dunamu’s Digital Asset Fear & Greed Index is divided into stages: 'Extreme Fear (0?20)', 'Fear (20?40)', 'Neutral (40?60)', 'Greed (60?80)', and 'Extreme Greed (80?100)'. A move toward greed indicates increased buying interest among market participants, while a shift toward fear reflects a growing fear of asset decline, leading to market exits and a chain reaction of price drops.