[Bitcoin Now] Rebounded After US Giant Step... But Outlook Remains 'Dark Clouds'

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] Following the U.S. Federal Reserve's (Fed) 'giant step' of raising the benchmark interest rate by 0.75 percentage points at once, the price of the leading cryptocurrency Bitcoin is showing an upward trend. However, since several negative factors have not yet cleared, the rise is expected to be short-lived.

According to the global cryptocurrency market tracking site CoinMarketCap, as of 10:53 a.m. on the 16th, the price of Bitcoin was recorded at $22,536 (approximately 28.94 million KRW), up 1.68% from the previous day. Although it faced a crisis of falling below $20,000 the day before, the upward trend on this day helped it recover to the $22,000 range.

The price of Bitcoin rose on the 15th (local time) after the Fed raised the benchmark interest rate from the previous 0.75?1.00% to 1.50?1.75%, a 0.75 percentage point increase, due to a sense of relief that some uncertainties had been removed. Previously, Bitcoin also showed strength after the Fed raised the benchmark interest rate by 0.25 percentage points on March 16 and by 0.5 percentage points on May 4.

However, during the previous rate hike in May, the upward trend did not last long. Due to inflation concerns and expectations of further Fed hikes, Bitcoin prices fell from the next day. The current situation is similar. The Fed has hinted at additional rate hikes at the July Federal Open Market Committee (FOMC) regular meeting to curb inflation. Fed Chair Jerome Powell said, "From today's perspective, it is highly likely that the next meeting will discuss a rate hike in the range of 0.5 to 0.75 percentage points." Additionally, the Luna Classic incident and other factors have eroded trust in the cryptocurrency market, causing prices and trading volumes to decline, which is another negative factor.

Experts explain that despite today's rebound, there is a high possibility of further price declines. Josh Allsworth, Research Team Leader at global asset management firm Valkyrie, explained, "A decrease in downward volatility in the cryptocurrency market is likely to occur when the current Fed policy and direction are halted or changed." Professor Hong Ki-hoon of Hongik University's Department of Business Administration said, "Today, Bitcoin prices are rising due to psychological factors," adding, "If the effects of the rate hike are felt and anxiety about the Fed raising rates to curb inflation approaches, prices will fall again."

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