If Biden Resigns, a Stronger Candidate
Could Actually Spur Price Decline
September Rate Cut Expectations
Still Insufficient to Boost Prices
The price of Bitcoin, the cryptocurrency with the largest market capitalization, has fallen below 80 million won for the first time in four months. Despite former President Donald Trump showing a pro-cryptocurrency stance following the first U.S. TV presidential debate at the end of last month and growing expectations that the U.S. Federal Reserve will cut interest rates in September, the downward trend continues.
Bitcoin Falls Below 80 Million Won
According to Google Finance on the 4th (local time), the price of one Bitcoin was 78.9 million won at 11:54 p.m., down 5.6% from the previous trading day. This is the first time Bitcoin’s price has dropped below 80 million won since February 27.
After surpassing 100 million won on domestic exchanges in March and showing a sideways trend during the halving period, Bitcoin’s price was expected to reach a turning point following the first U.S. TV presidential debate on the 27th of last month. Regarding cryptocurrency, former President Trump took a friendly stance, while President Joe Biden adopted a regulatory position. The debate was widely regarded as a decisive victory for Trump, which the market expected to be a positive factor for Bitcoin, but the price has continued to decline.
Bloomberg News analyzed that the possibility of President Biden abandoning his re-election bid is causing the Bitcoin price decline. Amid growing demands from pro-Democratic Party media, politicians, and major donors for Biden to withdraw from the race, if Biden fails to persuade voters and resigns, a stronger Democratic candidate could emerge, making it difficult for Trump’s cryptocurrency policy plans to be realized.
Expectations that the Federal Reserve will cut interest rates in September due to easing overheating in the U.S. labor market have also failed to act as a positive factor.
Concerns Over Mount Gox Repayment and Other Negative Factors
The market remains concerned that Bitcoin held by the Japanese cryptocurrency exchange Mount Gox, which went bankrupt in 2014, will be released in earnest starting this month. Mount Gox, once the world’s largest Bitcoin exchange, collapsed after it was revealed that 950,000 Bitcoins had been hacked. The industry estimates that over 140,000 Bitcoins will be returned to customers, amounting to approximately $9 billion (about 12.5 trillion won).
The possibility of the German government disposing of Bitcoins it had seized has also contributed to the price decline. According to blockchain analytics firm Arkham Intelligence, about $75 million worth of Bitcoins were transferred from the German government’s wallet to an exchange on this day.
The continued strength of the U.S. dollar, the world’s reserve currency, is also acting as a factor preventing Bitcoin’s price from rising. The Dollar Index (DXY), which measures the value of the dollar against six major currencies including the euro and yen, stood at 105.13 on the 4th. A reading above 100 indicates dollar strength, and this index has risen about 1% over the past month.
Many Positive Outlooks for Future Prices
Nevertheless, there are many positive evaluations regarding Bitcoin’s price outlook. First, there is widespread expectation that the U.S. Securities and Exchange Commission (SEC) will approve the launch applications for Ethereum spot exchange-traded funds (ETFs) submitted by eight asset management firms including BlackRock. This is seen as a positive factor because it could lead to capital inflows into Bitcoin as well.
Matt Hogan, Chief Investment Officer at Bitwise Asset Management, pointed out that the Democratic Party’s stance on cryptocurrency regulation is also softening, which is positive for Bitcoin. CNBC cited a report from cryptocurrency data provider CC Data, stating, “The post-halving upward phase for Bitcoin is not over yet, and Bitcoin’s price is likely to reach its highest level this year.”
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