Coin Prices Rebound on Expectations of US CPI Slowdown...Will It Escape the Recession?

Bitcoin Price Rises 3.38% Over One Week
Investor Sentiment Recovers to 'Fear' Stage
"Too Many Variables to Confirm Entry into Uptrend"

[Asia Economy Reporter Lee Jung-yoon] The prices of virtual assets, which had been stagnant or declining due to concerns about tightening, showed an upward trend over the past week. This is interpreted as being due to expectations that U.S. inflation, a key variable affecting coin prices, will slow down.

According to the global virtual asset market status relay site CoinMarketCap, as of 3 p.m. on the 11th, the price of Bitcoin was recorded at $17,424 (approximately 21.68 million KRW), up 3.38% compared to a week ago. The rise in altcoins was also notable. Ethereum, the leading altcoin, rose 6.75% during the same period to $1,332 (approximately 1.66 million KRW), and Binance Coin, ranked 4th in total virtual asset market capitalization, recorded an 8.15% increase to $276 (approximately 340,000 KRW). Cardano, which reportedly saw an increase in wallets holding more than one million coins, surged by as much as 19.15%.

The recent upward trend in virtual asset prices is due to somewhat eased concerns about U.S. inflation. The market expects the U.S. December Consumer Price Index (CPI), scheduled to be announced on the 12th, to show a 6.6% increase year-on-year, which is a slowdown compared to the 7.1% increase in the previous month. As the inflation growth rate decreases, the Federal Reserve's (Fed) aggressive interest rate hike policy, which greatly affects risk assets like coins, is expected to soften, influencing market sentiment.

Due to the recent price increase, virtual asset investment sentiment has also slightly recovered. According to Alternative, a virtual asset data provider, the Fear & Greed Index representing investment sentiment recorded 26 points (fear) on the day. It showed 25 points (extreme fear) until the 9th but improved to the fear level from the previous day. Alternative's Fear & Greed Index means that a score closer to 0 indicates extreme fear and pessimism about investment, while a score near 100 indicates optimism.

However, trading volume remains at a low level. Moreover, there are predictions that the U.S. benchmark interest rate could reach 6%, leading to expectations that the virtual asset price rally may not continue. From the 1st to the 10th of this month, the average daily Bitcoin trading volume was $13.369 billion (approximately 16.6711 trillion KRW), which is a 23.44% decrease compared to last month's average daily volume of $17.46311 billion. Compared to November of last year, the decline was even more significant, plunging by 67.25%. Additionally, it decreased by 56.73% compared to October of last year.

Kim Min-seung, a researcher at the Korbit Research Center, explained, "Expectations of easing inflation and monetary tightening spread, leading to a rally in most coins from around 8 a.m. on the 9th, with coins having smaller market capitalizations showing larger gains. It seems that various assets, including virtual assets, are on the rise due to forecasts that the December CPI increase will fall short of expectations and hopes that monetary tightening is nearing its end."

However, he added, "There are still many variables, so it is difficult to say that we have entered an upward trend in the long term." Researcher Kim also noted, "It is true that the trading volume of spot and futures has decreased. I think the relationship between trend rebounds and trading volume is like that of chicken and egg; if a clear rebound is seen, trading volume can increase."

This content was produced with the assistance of AI translation services.