Bitcoin Recovers to 50 Million Won... Stock Prices Still in Early Morning Slump

[Asia Economy Reporters Ji Yeon-jin and Lee Jung-yoon] As the leading cryptocurrency Bitcoin recovers to 50 million KRW, attention is focused on whether individual investors' risk asset investment sentiment will revive. Bitcoin's price sharply rebounded within 20 days after falling below 50 million KRW since the domestic stock market plunged on the 18th of last month.

According to the domestic cryptocurrency exchange Upbit on the 7th, as of 9 a.m., Bitcoin's price rose by 0.03% (38,000 KRW) from the previous day to record 51.75 million KRW. On the global cryptocurrency market tracking site CoinMarketCap, Bitcoin was traded at $41,983 (approximately 50.36 million KRW), approaching the $42,000 level at around 11:34 p.m. the previous day.

Bitcoin's price, which once exceeded 81 million KRW in November last year, declined in tandem with the US stock market. This was due to the imminent Federal Reserve (Fed) monetary tightening, which shifted investor sentiment from risk assets to safe assets. However, from the early hours of the 5th, Bitcoin surged more than 10%, quickly recovering from the 46 million KRW range to the 50 million KRW level. It has been trading in the 51 million KRW range since the previous day. Analysts attribute the sharp rise in Bitcoin prices to the rebound in the US stock market, centered on tech stocks, following Amazon's fourth-quarter net profit doubling to $14.3 billion (approximately 17.2 trillion KRW). Additionally, the US Congress's push for a bill exempting capital gains tax on cryptocurrency payments under $200 (approximately 240,000 KRW) also acted as a positive factor. Seosangyoung, a researcher at Mirae Asset Securities, stated, "Following the news of the US Congress's tax exemption bill for small cryptocurrency transactions, Bitcoin surged over the past weekend, leading Tesla (3.61%) to show strength, and related stocks such as MicroStrategy (15.16%) and Coinbase (7.24%) also rose."

This rebound in Bitcoin is analyzed to stimulate risk asset preference sentiment and could act as a green light in the domestic stock market. In fact, on this day, the KOSPI turned downward from the start of trading as institutions engaged in large-scale selling, interpreting the recently announced US 'employment surprise' as a factor accelerating Fed tightening. However, individual and foreign investors increased their buying, defending against a wider decline. Kim Kyung-min, a researcher at Hana Financial Investment, said, "Investment sentiment improved due to Google's earnings surprise and stock split, which are semiconductor demand sources in the US, and Amazon's strong performance," adding, "The cryptocurrency rebound is also positive for investment sentiment."

The global spread of the COVID-19 variant Omicron reaching a 'peak-out' (decline after the peak) is also expected to act as a positive factor. Chae Hyun-gi, a researcher at Cape Investment & Securities, said, "As the number of COVID-19 cases is likely to peak out with the end of the winter season, buying reopening stocks with solid earnings is considered effective."

However, concerns remain that economic indicators such as the US Consumer Price Index (CPI) on the 10th of this month (local time) could again trigger a significant stock market correction. Lee Kyung-min, a researcher at Daishin Securities, said, "The technical rebound of the global stock market, including the KOSPI, is expected to end around the time of confirming the January CPI," adding, "It is darkest just before dawn." He recommended reducing stock holdings and increasing cash holdings above the KOSPI 2750 level, as volatility in the global financial market and KOSPI may expand until early to mid-March when US interest rate hikes are anticipated.

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