Already Above $23,000... Bitcoin Outlook Is Also Not Bad

37% Surge on Fed Rate Hike Pace Expectations
"Trend Maintained If Macroeconomic Outlook Remains Unchanged"

[Asia Economy Reporter Lee Jung-yoon] As expectations arise for the U.S. Federal Reserve (Fed) to slow the pace of interest rate hikes, Bitcoin prices have surged past the $23,000 level in a flash. Indicators related to Bitcoin prices have also shifted to positive signals, leading to forecasts of further increases.

According to the global cryptocurrency market tracking site CoinMarketCap, as of 3:20 PM on the 25th, Bitcoin was priced at $22,679 (approximately 27.96 million KRW), down 1.92% from the previous day. Bitcoin prices began an upward trend starting from the 12th of this month. At the beginning of the year, it remained around $16,550 but has since soared about 37%. On the 21st of this month, it even surpassed the $23,000 level for the first time since August last year.

The rapid price surge in such a short period reflects expectations that the U.S. will reduce the magnitude of its interest rate hikes. It is widely anticipated that at the Federal Open Market Committee (FOMC) meeting scheduled for the end of this month, the Fed will lower the rate hike increment to 0.25 percentage points. The U.S. Consumer Price Index (CPI) for December rose 6.5% year-over-year. This marks the fifth consecutive month of a reduced increase, and on a month-over-month basis, it fell by 0.1%. This is the first month-over-month CPI decline since May 2020.

Other indicators besides price are also supporting the recent upward trend in coin prices. Bitcoin's MVRV (Market Value to Realized Value) stood at 1.14 as of the previous day. Since recording 1.01 on the 13th of this month, it has consistently remained above 1. MVRV is calculated by dividing the market capitalization by the realized market capitalization; a value below 1 indicates that the coin is undervalued. On the 23rd, MVRV rose to 1.15, the highest level since June last year.

As Bitcoin prices recover to past levels, miners' profitability is also improving. Bitcoin's Puell Multiple was 0.61 at the beginning of the year but rose to 0.76 as of the previous day. This indicator represents the value of Bitcoin mined in one day divided by the average daily mining volume over the past year. It shows how profitable mining is compared to the previous year, with values below 0.4 interpreted as a bottom. During the recent price increase, the Bitcoin Puell Multiple has also shown an upward trend.

Additionally, investment sentiment toward virtual assets has shifted from 'fear' to a 'neutral' stage since last week. According to the virtual asset data provider Alternative, the Fear & Greed Index, which quantifies investment sentiment, was 51 points (neutral) on this day, down 1 point from the previous day. Investors feel extreme fear and pessimism about investments as the index approaches 0 points, while optimism increases as it nears 100 points.

Experts predict that the price uptrend will continue unless any special variables emerge. Lee Mi-seon, head of the Research Center at Bithumb Economic Research Institute, said, "Unlike last year, macro-related variables are acting in the opposite direction this year," adding, "If forecasts do not deviate significantly, the recent trend in virtual assets is expected to be maintained." She further noted, "It is not entirely possible to rule out the emergence of internal variables in the virtual asset market, such as liquidity crises," but added, "Since coin prices are rising, the likelihood of such variables occurring may decrease."