[Bitcoin Now] Luna Plummets, Falls Below $30,000 Amid US CPI Release

[Image source=Yonhap News]

[Asia Economy Reporter Myunghwan Lee] Bitcoin is sharply declining due to a combination of negative factors, including the collapse of 'Luna' and a higher-than-expected increase in the U.S. Consumer Price Index (CPI) for April.

According to the global cryptocurrency market tracking site CoinMarketCap, as of 11:40 a.m. on the 12th, the price of Bitcoin fell 7.22% from the previous day to $29,143 (approximately 37.45 million KRW), breaking below the $30,000 mark.

The significant drop in Bitcoin’s price is attributed to the impact of Luna’s collapse. Luna serves as the native token of the stablecoin 'TerraUSD (UST)'. When UST, designed to maintain a value of 1 USD, fell below 1 dollar, Luna also plunged due to concerns over instability. This led to increased selling pressure amid fears that the Terra Foundation, which issued Terra, might liquidate billions of dollars worth of Bitcoin holdings to stabilize UST’s price.

Cryptocurrency specialized media CoinDesk quoted Edward Moya, a researcher at OANDA America, saying, "As UST plummeted, the majority of institutional investors who invested last year are currently experiencing losses."

The U.S. April Consumer Price Index (CPI) released the previous day also appeared higher than expected, which is believed to have influenced Bitcoin’s price. The U.S. Department of Labor reported that the April CPI surged 8.3% compared to the same month last year, exceeding the market forecast of an 8.1% increase.

This triggered a chain reaction of declines in the U.S. stock market. The Nasdaq index, which is tech stock-heavy and tends to move in tandem with Bitcoin prices, closed at 11,364.24 on the 11th (local time), down 373.43 points (3.18%) from the previous trading day. The Dow Jones Industrial Average fell 326.63 points (1.02%) to 31,834.11, and the S&P 500 dropped 65.87 points (1.65%) to 3,935.18.

There is analysis that the higher-than-expected inflation will also affect investor sentiment toward cryptocurrencies. Researcher Moya stated, "The market’s reaction to the inflation report will continue to make it difficult to attract investors," adding, "If Bitcoin breaks below $28,500 due to selling pressure, additional technical selling could occur."

Major altcoins are also declining. At the same time, Ethereum is trading at $2,096 (approximately 2.69 million KRW), down 11.15% from the previous day, and Solana is trading at $48.49 (approximately 62,300 KRW), down 25.66% from the previous day.

Meanwhile, Dunamu, which operates the domestic cryptocurrency exchange Upbit, reported that its Digital Asset Fear & Greed Index recorded 19.75 on this day, indicating a 'Extreme Fear' stage. This is an increase of 4.66 compared to 15.09 (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, whereas a shift toward fear reflects growing anxiety about asset declines, leading to market exits and a chain reaction of price drops.