[Bitcoin Now] Cryptocurrency Asset Management Scale Declines for 2 Consecutive Months... 'Merge' Effect Also Disappears

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] The scale of cryptocurrency assets under management (AUM) has declined for two consecutive months. This is due to the continued slump in the cryptocurrency market, with the AUM related to Ethereum, which completed the Merge upgrade, also turning downward.

According to cryptocurrency data analytics firm CryptoCompare on the 5th, the AUM of digital asset investment products from the 1st to the 26th of last month was $22.5 billion (approximately 31.905 trillion KRW), down 12.7% from the previous month. This figure represents a decrease of about 48.6% compared to the beginning of this year.

The AUM of digital asset investment products rebounded successfully in July but declined for two consecutive months starting in August. The cryptocurrency market was directly hit by concerns over tightening and the Federal Reserve’s (Fed) interest rate hikes. CryptoCompare explained, "Last month, the Fed decided to raise the benchmark interest rate by 75 basis points (1bp=0.01%), and the market continued its downward trend," adding, "This resulted in a sharp drop in prices of cryptocurrencies such as Bitcoin and Ethereum." Bitcoin prices fell into the $20,000 range from August 27 and dropped to the $18,000 range. Although it rose to the $22,000 range on the 13th of last month, it soon declined again, fluctuating between $18,000 and $20,000.

Among the digital asset investment products’ AUM last month, Bitcoin-related assets fell 10.7% to $15.6 billion, accounting for 69.4% of the total.

On the other hand, Ethereum, the leading altcoin, recorded $5.49 billion, down 19.3%, making up 24.5% of the total. Ethereum-related assets had increased by 2.36% in August compared to the previous month, influenced by heightened interest ahead of the Merge upgrade. However, after the Merge upgrade was completed and profit-taking selling emerged, Ethereum prices dropped, and the AUM decreased again. CryptoCompare noted, "It is noteworthy that despite the historic catalyst of the Merge upgrade, Ethereum-based products performed worse than other products."

The Merge upgrade refers to the transition of the blockchain algorithm from Proof of Work (PoW) to Proof of Stake (PoS), allowing holders of cryptocurrency to participate in verification and block creation by staking their coins instead of mining. This transition is expected to partially resolve carbon emission issues caused by mining.

Meanwhile, according to the global cryptocurrency market tracking site CoinMarketCap, as of 9:42 a.m. on the day, Bitcoin was priced at $20,212 (approximately 28.71 million KRW), up 3.64% from the previous day.

With the U.S. stock market, which shows synchronization, closing higher, Bitcoin prices are also on the rise. The tech-heavy Nasdaq index rose 360.97 points (3.34%) to 11,176.41, the Dow Jones Industrial Average closed up 825.43 points (2.80%) at 30,316.32, and the large-cap S&P 500 index recorded 112.50 points (3.06%) higher at 3,790.93.

While the Fed is expected to raise the benchmark interest rate by 0.75 points in November, signs of economic slowdown have been detected in manufacturing indicators, strengthening the outlook that high-intensity tightening may be difficult to sustain. Additionally, a significant drop in U.S. job postings in August also had an impact. According to the Job Openings and Labor Turnover Survey (JOLTs) released by the U.S. Department of Labor, job openings in August were about 10.053 million, down approximately 10% from the previous month.

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