Bitcoin Sees Rise Despite Negative News, Uncertainty Remains
Despite various negative events, Bitcoin managed to rise this week (10th to 16th) compared to the previous week. The virtual asset experienced a significant drop when the bankrupt virtual asset exchange FTX decided to sell its holdings to repay its debts. Additionally, the US Consumer Price Index (CPI) for the previous month was higher than expected. However, analyses suggest that these factors did not have a significant impact on the market, leading to a subsequent rebound. Nonetheless, with ongoing concerns about inflation, it remains uncertain if the upward trend will continue.
Bitcoin Price Update
According to CoinMarketCap, a global virtual asset market site, the price of Bitcoin on the 16th, at 9:10 am, was recorded at $26,633 (approximately 35.45 million won), a 2.86% increase compared to the previous week. Despite a drop earlier this week, with levels hovering around $25,900 until the 11th, it saw a significant decline to $25,000 the following day. However, the cryptocurrency has steadily risen since then, reaching the $26,600 level.
FTX Virtual Asset Sales
Analysts attribute Bitcoin’s early-week decline to FTX’s decision to sell its virtual assets. On the 13th, FTX filed a request with the United States Bankruptcy Court to sell these assets as part of its debt repayment. FTX currently holds virtual assets valued at over 4 trillion won. Concerns arose that this large volume could impact the market, resulting in a freeze in investment sentiment.
However, the market soon stabilized as experts determined that the scale of FTX’s virtual asset sales was absorbable by the market. Moreover, the sale was anticipated to be conducted ‘over the counter (OTC)’, minimizing its impact. Mesari, an on-chain analysis platform, reported that the Bitcoin held by FTX accounts for approximately 1% of the weekly trading volume, with similar proportions for Ethereum. Additionally, Solana, which possesses a relatively large amount of Bitcoin, has a locked volume that cannot be traded for the next four years, making it difficult for an immediate price drop to occur.
Bitcoin and CPI Increase
Bitcoin also defied expectations following the announcement of the August Consumer Price Index increase by the US Department of Labor on the 13th. The increase rate stood at 3.7%, the highest in 14 months. This exceeded the market’s projection of 3.6% and the previous month’s figure of 3.2%. A high CPI increase rate could prompt the US central bank, the Federal Reserve (Fed), to adopt a more stringent policy, which typically affects Bitcoin’s price negatively.
However, when excluding the volatile factor of increased oil prices during the holiday season in August, the level of inflation was evaluated to be within market expectations. The ‘core CPI’, which excludes the prices of food and energy, rose by 4.3% compared to the previous year, a decrease of 0.4 percentage points from the previous month’s 4.7%. This aligns with market forecasts and represents the smallest increase in the past two years.
Consequently, speculation arose in the market that the Federal Reserve would maintain the current interest rates at the Open Market Committee (FOMC) meeting held this month. The federal funds rate futures, the US benchmark interest rate, traded on the Chicago Mercantile Exchange (CME), reflected a 97% probability of the Federal Reserve maintaining interest rates at the FOMC in September. The previous day, it was at 92%. This decrease suggests that Bitcoin’s upward trend has been influenced by somewhat alleviated concerns regarding inflation.
Future Uncertainty
Despite the temporary relief, uncertainties regarding inflation persist, raising doubts about Bitcoin’s continued rise. Bloomberg predicts that the Federal Reserve will raise interest rates once again before the year ends, as the ‘core CPI’ that the Fed relies on remains significantly above their 2% inflation target.
[시사저널e=유길연 기자] Bitcoin rose this week (10th to 16th) compared to last week despite various negative news. Bitcoin fell significantly at one point when the bankrupt virtual asset exchange FTX decided to sell its virtual assets to repay its bonds. In addition, the US Consumer Price Index (CPI) last month was also higher than expected. However, as analysis revealed that both factors were not having a significant impact on the market, Bitcoin managed to rebound. However, as inflation concerns remain, it is unclear whether the upward trend will continue.
According to CoinMarketCap, a global virtual asset market site, on the 16th, at 9:10 am on this day, the price of Bitcoin was $26,633 (about 35.45 million won), up 2.86% compared to a week according to. Bitcoin recorded a downward trend earlier this week. It remained at the $25,900 level until the 11th, but dropped significantly the next day to $25,000. However, it has steadily risen since then, rising to the $26,600 level.
It is analyzed that the reason Bitcoin fell early this week was because FTX decided to sell virtual assets held by FTX. On the 13th, FTX asked the United States Bankruptcy Court for the District of Delaware to sell virtual assets to repay creditors. FTX currently owns more than 4 trillion won in virtual assets. Due to concerns that this volume could spill over into the market, market investment sentiment has largely frozen.
However, the market soon stabilized. This is because experts have found that the scale of FTX virtual asset sales is at a level that the market can absorb. It was also anticipated that the volume would be sold ‘over the counter (OTC)’, so the impact on the market would be less. Mesari, an on-chain analysis platform, said, “The Bitcoin held by FTX accounts for about 1% of the weekly trading volume. The same is true for Ethereum,” and added, “Solana, which holding a relatively large amount, also having a locked volume that cannot be traded for the next four years “It will be difficult to cause an immediate drop in prices,” he predicted.
Bitcoin also outperformed the CPI announcement. The August CPI increase rate published by the US Department of Labor on the 13th (local time) was 3.7%. This was the highest in 14 months. It is higher than the market expectation of 3.6% and higher than the previous month’s 3.2%. If the CPI rate of increase is high, there is a possibility that the US central bank, the Federal Reserve (Fed), will strengthen its tightening policy. This has a negative effect on the Bitcoin price.
However, excluding the increase in oil prices that occurs in August, which is the holiday season, many evaluated that the level of inflation was not higher than market expectations. ‘Core CPI’, which excludes food and energy prices, which are highly volatile due to seasonal factors, rose by 4.3% compared to the previous year. This is a decrease of 0.4 percentage points compared to 4.7% the previous month. It is also in line with market expectations and is the smallest increase for around two years.
Accordingly, there was speculation in the market that the Federal Reserve would freeze interest rates at the Open Market Committee (FOMC) meeting held this month. On the day the CPI was published, federal funds rate futures (the US benchmark interest rate) traded on the Chicago Mercantile Exchange (CME) reflected a 97% probability that the Federal Reserve would freeze interest rates at the FOMC in the month of September. The day before it was 92%. It is interpreted that the Bitcoin market has also recorded an upward trend as concerns about inflation have subsided somewhat.
However, since inflation concerns have not completely disappeared, some say it is unclear whether Bitcoin will continue to rise. Bloomberg predicted that the Fed will raise interest rates once more within the year, saying that the ‘core CPI’ that the Fed values is still well above the Fed’s 2% inflation target.
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