Market Cap Drops 70%... Bitcoin Falls Below $20,000 for the First Time in 1.5 Years (Comprehensive)

[Image source=Yonhap News]

Ethereum also at 1.33 million won

Amid fears of US inflation rise and economic recession

Cryptocurrency firms face 'domino bankruptcy' crisis

Some forecasts say further price declines unlikely

[Asia Economy Reporter Kim Min-young] In the domestic cryptocurrency market, Bitcoin prices have plunged again, trading in the 25 million won range.

As of 9:35 PM on the 18th, the price of 1 Bitcoin on the cryptocurrency exchange Upbit was 25,606,000 won, down 5.13% compared to 24 hours earlier. This marks the 12th consecutive day of decline. Compared to the all-time high recorded in November last year (68,990 USD / 89.34 million won), it has dropped more than 70%.

Ethereum, the second largest cryptocurrency by market capitalization, also showed a decline of over 6%, trading around 1.33 million won.

Bitcoin prices have continued to fall since the US May Consumer Price Index (CPI) rose 8.6% year-on-year on the 10th, marking the highest level in about 40 years. This decline in Bitcoin is attributed not only to negative factors in the cryptocurrency industry but also to the shock of US inflation and expectations that the US Federal Reserve (Fed) will tighten monetary policy further, which has dampened investor sentiment toward risky assets.

Until early last month, Bitcoin maintained around 40,000 USD but plunged to 28,000 USD following the crash of domestic cryptocurrencies Luna and Terra. This month, it recovered to the 30,000 USD range but then worsened due to the US inflation shock, recession fears causing a stock market plunge, and the revelation that coin lending companies faced a 'domino bankruptcy' crisis due to the Luna incident. Additionally, the cryptocurrency hedge fund 'Three Arrows Capital' mentioned asset sales and bailout plans as it could not bear the burden of massive losses.

According to CoinGecko, the total market capitalization of cryptocurrencies is currently about 900 billion USD, down 70% from the peak of around 3 trillion USD in early November last year.

However, there are also analyses suggesting that the downward trend in cryptocurrency prices will not continue further. Mike McGlone, a Bloomberg Intelligence analyst, said, "Bitcoin will establish a price base around 20,000 USD," adding, "Similar phenomena occurred in the past at 5,000 USD in 2018-2019 and at 300 USD in 2014-2015."

He added, "Reduced volatility and rising prices are typical characteristics that appear as digital assets mature."

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