[Bitcoin Now] Decline Continues Ahead of US FOMC... $21,000 Level 'At Risk'

[Asia Economy Reporter Lee Myunghwan] Bitcoin prices are experiencing a sharp decline ahead of the U.S. Federal Open Market Committee (FOMC) meeting. As the Federal Reserve (Fed) is expected to raise the benchmark interest rate by 0.75 percentage points, risk asset appetite appears to have weakened.

According to the global cryptocurrency market tracking site CoinMarketCap, as of 10:34 a.m. on the 26th, Bitcoin was recorded at $21,142 (approximately 27.71 million KRW), down 6.00% from the previous day.

The decline in Bitcoin prices is presumed to be due to caution ahead of the FOMC. The Fed will hold its July FOMC regular meeting for two days starting on the 26th (local time) to decide on the benchmark interest rate. Most experts expect the Fed to raise the benchmark interest rate by 0.75 percentage points at this FOMC. Edward Moya, Senior Market Analyst at global investment firm OANDA, said, "Cryptocurrencies are generally showing weakness ahead of the FOMC decision, which reviews the benchmark interest rate and inflation measures," adding, "If geopolitical tensions escalate and the U.S. dollar strengthens, it will dampen cryptocurrency investment sentiment."

However, cryptocurrency specialized media CoinDesk reported that there are not only negative factors for Bitcoin prices ahead of the FOMC. The media noted that the Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's 'fear index,' fell to 22.41, indicating relative calm. A lower volatility index means lower volatility. Eric Chen, co-founder of Injective Protocol, said, "The possibility of a 0.75 percentage point rate hike by the Fed reassured a market that had feared even harsher negative factors," adding, "Overall, the market is in a more optimistic position than one to two weeks ago."

Meanwhile, the Digital Asset Fear & Greed Index by Dunamu, which operates the domestic cryptocurrency exchange Upbit, recorded 39.59 on the day, indicating a 'neutral' stage. This is a decrease of 2.76 from 42.34 (neutral) the previous day. 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 by market participants, whereas moving toward fear indicates a fear of asset decline, leading to market exits and a chain reaction of price drops.