[Bitcoin Now] Bear Market Coin Sector... Asset Under Management Size Declines Again

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] As concerns over the US interest rate hikes caused the cryptocurrency market to enter a slump, the scale of cryptocurrency assets under management (AUM) that had been recovering has turned downward again.

According to cryptocurrency data analysis firm CryptoCompare on the 5th, the AUM of digital asset investment products from the 1st to the 23rd of last month was recorded at $25.8 billion (approximately 35.15 trillion KRW), down 4% compared to the previous month.

The AUM of digital asset investment products had been declining since April but rebounded with a 16.9% increase last month. However, as concerns over tightening monetary policy caused coin prices to weaken, the downward trend resumed. The price of the representative cryptocurrency Bitcoin was around $23,800 at the beginning of last month but plunged to the $21,000 range by the 19th. Following Jerome Powell’s hawkish speech at the Jackson Hole meeting, fears of continued tightening caused it to plummet further to the $19,000 range. The total cryptocurrency market capitalization, which had exceeded $1.1 trillion, also dropped by more than $140 billion within a month.

As Bitcoin prices fell, the Bitcoin-related portion of the AUM of digital asset investment products last month decreased by 7.16% to $17.4 billion, accounting for 67.6% of the total scale.

However, Ethereum, the leading altcoin, saw a 2.36% increase to $6.81 billion (approximately 9.28 trillion KRW). This is because investor interest focused on Ethereum’s Merge upgrade scheduled for September 19. Through this upgrade, the consensus mechanism will shift from the current Proof of Work (PoW), which requires mining through computer calculations, to Proof of Stake (PoS), where holders receive rewards proportionally. This is expected to improve transaction processing speed (TPS) and partially resolve carbon emissions issues caused by mining. Ethereum’s price rose over 17% from the $1,700 range to the $2,000 range between the 1st and 14th of last month.

CryptoCompare stated, "Ethereum led the rebound in July and continued to show strength last month. Bitcoin-related AUM and trading volume did not increase last month. Ethereum is attracting attention as the highly anticipated Merge approaches, so in the short term, interest seems to be shifting away from Bitcoin."

As cryptocurrency prices weaken, investor sentiment is gradually shrinking. According to cryptocurrency data provider Alternative, the Fear & Greed Index, which measures investor sentiment, dropped from 47 points (neutral) on the 14th of last month to 23 points (fear) by the end of the month. On the day in question, it rose by 3 points from the previous day to 23 points (extreme fear). Alternative’s Fear & Greed Index ranges from 0, indicating extreme pessimism about investment, to 100, indicating optimism.

Meanwhile, according to the global cryptocurrency market tracking site CoinMarketCap, as of 11:09 AM on the day, Bitcoin’s price was recorded at $19,840 (approximately 27.17 million KRW), up 0.29% from the previous day. Due to ongoing concerns over tightening, Bitcoin’s price has been fluctuating between $19,000 and $20,000 since the beginning of this month.