[Bitcoin Now] Rollercoaster on 'Powell's Words'... $1000 Fluctuation in a Day

[Asia Economy Reporter Lee Myunghwan] Bitcoin prices showed extreme volatility, fluctuating more than 5% within a single day.

According to the global cryptocurrency market tracking site CoinMarketCap, as of 8 a.m. on the 28th, Bitcoin was priced at $19,000 (approximately 27.11 million KRW), down 0.60% compared to the same time the previous day.

Although Bitcoin's price was similar compared to the same time the previous day, it was trading above $20,000 just 8 hours earlier at midnight. According to CoinMarketCap, Bitcoin reached $20,221 (approximately 28.85 million KRW) at 12:14 a.m. that day. Afterward, a sudden sharp decline began, and by 1:54 a.m., it had dropped to $19,097 (approximately 27.25 million KRW). In just over two hours, it fell by about $1,000, a drop of more than 5%.

Earlier, Bitcoin experienced a sudden surge the previous morning. Around 9 a.m. on the 27th, Bitcoin was priced in the low $19,000s, but by noon on the same day, it was trading around the $20,000 mark, rising nearly $1,000 in about three hours. This was the first time Bitcoin surpassed $20,000 in nine days since June 18.

This decline appears to be influenced by remarks from Jerome Powell, Chair of the U.S. Federal Reserve (Fed), emphasizing regulation of cryptocurrencies. According to major foreign media such as Bloomberg, Powell attended a monetary policy conference hosted by the Bank of France on the 27th (local time) and stated, "Appropriate regulation is necessary for cryptocurrencies, including stablecoins." Stablecoins are cryptocurrencies designed to be pegged to the value of major currencies such as the dollar. Terra and Luna, which caused a crash in May, are also stablecoins.

The short-term surge the previous morning also seems related to unconfirmed information circulating about Powell's remarks. On social media platforms such as Twitter and Telegram, unverified information spread ahead of the conference suggesting that Powell would make statements supporting the development of the cryptocurrency market. Some analysts suggested that as the U.S. stock market, which tends to move in sync with Bitcoin prices, declined, some investors fled to the cryptocurrency market.

Signals for regulation of stablecoins have been mentioned several times in the past. On the 16th, the U.S. White House released a digital asset fact sheet (a comprehensive framework for the responsible development of digital assets). The fact sheet included content on the use of central bank digital currencies (CBDCs), fostering the digital asset industry, and regulations on stablecoins. This is because stablecoins could pose a threat to the dollar's hegemony.

Not only the U.S., but major countries are also expected to regulate stablecoins, according to industry forecasts. Oh Yuri, head of policy research at Bithumb Economic Research Institute, said, "The White House fact sheet previously expressed the U.S.'s intention to regulate stablecoins. Legislation on stablecoin regulation is expected in the U.S. and Europe, and major countries will operate stablecoins at levels that do not threaten the implementation of their own digital currencies."