[Bitcoin Now] 16% Plunge Amid Inflation Fears and Bank Run Crisis... Lowest in 18 Months

[Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] The cryptocurrency market, including Bitcoin, has been hit hard by fears of inflation. Additionally, a bank run surrounding Ethereum, the leading altcoin, is further fueling the sharp decline in cryptocurrency prices.

According to the global cryptocurrency market tracking site CoinMarketCap, as of 10:06 AM on the 14th, the price of Bitcoin was recorded at $21,832 (approximately 28.17 million KRW), down 16.13% from the previous day. This is the first time Bitcoin has fallen to the $21,000 range since December 16, 2020. It has given up all the gains from last year’s unprecedented investment boom when it soared to the $67,000 range.

The bank run incident related to Ethereum is also impacting the sharp drop in cryptocurrency prices. At the same time, Ethereum was priced at $1,202 (approximately 1.55 million KRW), down 16.27% from the previous day, marking a decline of over 36% compared to the early this month when it was in the $1,900 range. Celsius, a cryptocurrency-backed lending company, conducted loans using stETH, a type of Ethereum staking token issued by the DeFi platform Lido, as collateral. However, suspicions arose that Celsius concealed losses, raising doubts about repayments, which triggered a bank run with many demanding repayment. This has once again brought to light trust issues in the cryptocurrency market following the Luna Classic and TerraUSD (UST) crash incidents. Ultimately, Celsius announced a temporary suspension of customer asset withdrawals.

As cryptocurrency prices, including Bitcoin and Ethereum, plummeted, the total cryptocurrency market capitalization disappeared by more than 176 trillion KRW in just one day. As of 9 AM on the same day, the total cryptocurrency market capitalization was recorded at $944.91706 billion (approximately 1,219.6989 trillion KRW), down 12.62% or $136.4163 billion (approximately 176.1407 trillion KRW) compared to the same time the previous day.

Meanwhile, according to cryptocurrency data provider Alternative, the Fear & Greed Index, which measures investment sentiment toward cryptocurrencies, fell by 3 points from the previous day to 8 points (extreme fear). This is the lowest level since last month’s 17th, when investment sentiment was dampened by the Luna Classic incident. Alternative’s Fear & Greed Index ranges from 0 to 100, where 0 indicates extreme fear and pessimism about investment, and a score close to 100 indicates optimism.