Improved 'Coin Sentiment' After US August CPI Peak... Will a Rebound Occur?

‘CPI, Little Impact on Base Rate Decision’ Assessment Boosts Investor Sentiment
Bitcoin, Ethereum, and Other Crypto Asset Prices Rebound
Uncertain if Investor Sentiment Will Further Recover... Many Negative Factors Including FTX Asset Disposal

Image source=Reuters·Yonhap News

Following the release of the US Consumer Price Index (CPI) for August, the prices of virtual assets such as Bitcoin rose, leading to a recovery in investor sentiment. Although concerns about inflation resurfaced, analyses suggested that it would not significantly impact the Federal Reserve's (Fed) decision on the benchmark interest rate.

According to virtual asset data provider Alternative, as of the 14th, the Fear & Greed Index, which measures investor sentiment, rose by 4 points from the previous day to 45 points (fear). The index had remained in the 40s throughout the month but plunged to 30 points on the 12th. This was partly influenced by the US Delaware bankruptcy court ruling that the global virtual asset exchange FTX, currently undergoing bankruptcy proceedings amid tightening concerns, could liquidate its assets to repay debts. There are concerns that the release of approximately $3.4 billion worth of virtual assets held by FTX, including Bitcoin, Ethereum, and Ripple, into the market could exert downward pressure on prices. Alternative's Fear & Greed Index ranges from 0, indicating extreme fear and pessimism about investing, to 100, indicating optimism.

However, investor sentiment improved after the August CPI was announced. The August CPI rose 3.7% compared to the same period last year, exceeding the previous month's 3.2% increase. The rise was higher than the market expectation of 3.6%, driven by increasing oil prices. However, the August core CPI, which excludes volatile food and energy prices, rose 4.3% compared to the same period last year, significantly slowing from the previous month's 4.7% increase. The 4.3% rise was the lowest in 22 months and aligned with market forecasts.

As a result, major virtual asset prices showed an upward trend. As of 2:54 PM that day, Bitcoin was priced at $26,175 (approximately 34.69 million KRW), up 1.06% from the previous day. Ethereum rose 1.85% to $1,614 (approximately 2.14 million KRW), and Ripple increased 0.89% to $0.48 (approximately 636 KRW).

However, questions remain about whether the coin market will enter a full-fledged upward trend despite the rise in virtual asset prices and improved investor sentiment. Investor sentiment still remains in the fear stage, and concerns about tightening could resurface depending on upcoming economic indicators.

The liquidation of FTX's held assets also poses a burden. In the first week of selling its held virtual assets, FTX reportedly set a limit of $50 million (approximately 6.63 billion KRW), with subsequent sales planned at $100 million increments. The weekly sales limit could be raised to $200 million, and the plan does not require prior notice before asset sales, which could lead to unexpected drops in coin prices.

Interest in the virtual asset market itself has declined compared to before, so expectations for capital inflow are not high. According to Google Trends data, the highest search frequency for the keyword 'bitcoin' in the past 90 days was on July 14. At that time, Bitcoin prices surged to the $31,000 range, and the overall coin prices rose after a court ruling favored Ripple Labs, the issuer of the virtual asset Ripple, in its securities dispute with the US Securities and Exchange Commission (SEC). However, as virtual asset prices declined afterward, search frequency also decreased; comparing the search frequency on July 14 as 100, it fell to 64 on the 10th of this month.

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