[Bitcoin Now] 6% Sharp Drop After Two Days of Rise... Back to $29,000 Level

[Image source=Yonhap News]

[Asia Economy Reporter Myunghwan Lee] The leading cryptocurrency Bitcoin fell more than 6%, dropping below the $30,000 mark for the first time in two days.

According to the global cryptocurrency market tracking site CoinMarketCap, as of 11:11 AM on the 2nd, Bitcoin's price recorded $29,830 (approximately 37.35 million KRW), down 6.38% from the previous day. Bitcoin, which had returned to the $31,000 level for the first time since the Luna incident following China's easing of COVID-19 lockdowns on the 31st of last month, gave back its gains within two days.

Cryptocurrency specialized media CoinDesk analyzed that Bitcoin's decline was due to increased risk aversion among investors after the U.S. stock market closed lower the previous day. On the 1st (local time), the Nasdaq index, which shows a correlation with Bitcoin prices, closed at 11,994.46, down 86.93 points (0.72%) from the previous trading day. The Dow Jones Industrial Average fell 176.89 points (0.54%) to 32,813.23, and the S&P 500 index, centered on large-cap stocks, dropped 30.92 points (0.75%) to 4,101.23.

The U.S. Federal Reserve's indication of tightening also seemed to have an impact. In the Beige Book economic report released the previous day, the Fed stated that the economy in most regions of the U.S. recently grew at a moderate or normal pace. Mary Daly, President of the Federal Reserve Bank of San Francisco, emphasized in an interview with CNBC that "we will do what is necessary to bring inflation down to the required level" and that monetary tightening policies must continue until inflation eases.

Joe DiPascal, CEO of BitBull Capital, said, "The sharp drop in Bitcoin's price is not surprising," adding, "It is showing movements to break through the price range of $31,000 to $32,000 while under pressure from traditional markets."

Meanwhile, the Digital Asset Fear & Greed Index by Dunamu, which operates the domestic cryptocurrency exchange Upbit, recorded 32.00 on the day, indicating a 'Fear' stage. This is an increase of 1.19 compared to 30.81 (Fear) the previous day. Compared to 28.75 (Fear) a week ago, it rose by 3.26. Dunamu's Digital Asset Fear & Greed Index is divided into stages of ‘Extreme Fear (0?20)’, ‘Fear (20?40)’, ‘Neutral (40?60)’, ‘Greed (60?80)’, and ‘Extreme Greed (80?100)’. The greed direction indicates increased interest in buying among market participants, whereas moving toward fear indicates a chain reaction of price declines as investors exit the market due to fear of asset depreciation.