[Bitcoin Now] 0.7% Drop in 'Breather'... Investor Sentiment Remains 'Greed'

Image source=AFP·Yonhap News

The price of Bitcoin, the leading virtual asset, is showing weakness as it gives back gains driven by expectations of interest rate cuts.

According to the global virtual asset market tracking site CoinMarketCap, as of 1:43 PM on the 17th, the price of Bitcoin was recorded at $41,967 (approximately 54.72 million KRW), down 0.73% from the previous day. Compared to a week ago, it is down 4.48%.

As recently as the 9th of this month, Bitcoin's price surpassed the $44,000 mark, recovering to the price level of April last year. Investor sentiment improved due to expectations of a Federal Reserve (Fed) interest rate cut and the anticipated launch of a Bitcoin spot exchange-traded fund (ETF). If a Bitcoin spot ETF is approved, it is expected that large-scale funds from institutions will flow into the virtual asset market. Analysts also suggest that asset management companies will increase Bitcoin purchases because they need to hold underlying assets roughly equivalent to the amount they manage for the ETF.

The halving event expected in April next year also had a positive impact on the price. The halving refers to the point when the number of Bitcoins rewarded for mining a block is cut in half, which is expected to reduce the supply of Bitcoin entering the market.

The reason Bitcoin's price gave back its gains is interpreted as an analysis that the price increase driven by these factors will be limited. JP Morgan stated in a report that if the U.S. Securities and Exchange Commission (SEC) approves all 13 issuers' Bitcoin spot ETF applications early next year, the returns of these ETFs are expected to be sluggish. They also predicted that the Bitcoin halving has already been priced in and will not help future price increases.

Additionally, John Williams, President of the Federal Reserve Bank of New York, clarified that interest rate cuts are not currently a topic of discussion at the Fed, countering remarks by Fed Chair Jerome Powell suggesting such discussions.

President Williams said, "We are really not talking about cutting rates right now," and added, "We are very focused on the question before us of whether we can achieve sufficiently restrictive monetary policy to ensure inflation returns to 2%, as Chair Powell has said." Regarding the question about the interest rate futures market pricing in a possible cut in March, he said, "I think it is premature even to think about that (cut)."

Investor sentiment in virtual assets is at a greed level. According to data from the virtual asset data provider Alternative, the Fear & Greed Index, which measures investor sentiment, rose 6 points from the previous day to 73 (Greed). Compared to 74 points (Greed) a week ago, it fell by 1 point. Alternative's Fear & Greed Index means that a score closer to 0 indicates extreme fear and pessimism about investing, while a score near 100 indicates optimism.