[Bitcoin Now] Falls Below 52 Million KRW... Moody's Issues Credit Rating Downgrade Warning for El Salvador

Patrick Harker, President of the Philadelphia Federal Reserve Bank, "Supports 3-4 Rate Hikes This Year"
El Salvador Adopted Bitcoin as Legal Tender in September Last Year

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] The leading cryptocurrency Bitcoin has fallen below the 52 million KRW mark. This is interpreted as the cryptocurrency market shaking after the U.S. Federal Reserve (Fed) suggested the possibility of up to four interest rate hikes. Meanwhile, international credit rating agency Moody's warned that Bitcoin transactions in the Latin American country El Salvador could lower the country's credit rating.

According to the domestic cryptocurrency exchange Upbit, as of 3:48 PM on the 14th, Bitcoin recorded 51.96 million KRW, up 0.16% compared to the previous day. It had risen to 53.94 million KRW the day before but has since declined. At 9:04 AM on the same day, it recorded 51.56 million KRW.

Concerns about interest rate hikes appear to have increased uncertainty. According to U.S. economic media Bloomberg on the 13th (local time), Patrick Harker, President of the Philadelphia Federal Reserve Bank, said at a conference hosted by the Philadelphia Business Journal, “We will start raising interest rates in March and support 3 to 4 hikes within the year,” adding, “Because inflation is higher than expected and the labor market is strong, tightening policies are inevitable.”

At the Federal Open Market Committee (FOMC) meeting held last month, about three interest rate hikes were expected this year. However, since Jerome Powell, the Fed Chair nominee, has focused on inflation and recognized it as a serious threat to achieving full employment, the likelihood of a more hawkish stance has increased. A hawkish stance refers to a preference for tightening monetary policy when the economy overheats.

Meanwhile, Moody's warned of a possible credit rating downgrade for El Salvador, which has adopted Bitcoin as legal tender and conducts transactions with it. According to Bloomberg on the 13th, Jamie Royse, a Moody's analyst, explained, “Bitcoin held by El Salvador is classified as a risky asset,” and “Bitcoin transactions are very risky for countries that have experienced liquidity pressures in the past.” He also added that if El Salvador purchases more Bitcoin in the future, the risk will increase further.

In September last year, El Salvador became the first country in the world to adopt Bitcoin as legal tender. However, the investment return is estimated to be negative. According to Bloomberg, El Salvador purchased at least 1,391 Bitcoins and the investment loss amounts to 10 million USD (approximately 11.87 billion KRW). However, this figure is based on tweets from Nayib Bukele, President of El Salvador. Currently, El Salvador has not disclosed the exact scale or timing of its Bitcoin investments.

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