Bitcoin extends super-rally amid SVB fiasco
| An electronic board shows the price movement of Bitcoin at a customer center of Bithumb in Seoul, March 16. Yonhap |
By Lee Min-hyung
Bitcoin has extended a surprising super-rally over the past week on the growing likelihood that the U.S. Fed will slow down the pace of further rate hikes in the wake of sequential collapses of overseas financial institutions.
According to data from the crypto market tracker, CoinMarketCap, Bitcoin is traded at around $27,000 as of 2 p.m. Sunday. This is an increase of around 35 percent since March 10 when Silicon Valley Bank (SVB) was shut down by U.S. regulators.
The rare crypto rally caught the eyes of investors here and abroad, as Bitcoin achieved a much stronger rebound than stocks from Wall Street. The price of Bitcoin and Ethereum ― two mainstream cryptocurrencies ― have typically moved in tandem with major U.S. stock indices for the past few years.
But investors preferred to purchase the world’s largest cryptocurrency by market capitalization on the widespread belief that its price has already hit the bottom. Market analysts, however, warned of the possibility of Bitcoin facing a price adjustment period.
“Digital assets’ combined market capitalization has been on the rise since last weekend,” Hong Seong-wook, an analyst at NH Investment & Securities, said. “But given that Bitcoin prices have traditionally coupled with representative risky assets such as stocks, we cannot rule out the possibility that Bitcoin returns its recent gains soon, as Nasdaq’s return was pretty good recently.”
Other crypto analysts expected the ongoing crypto rally to come to an end.
“It seems pointless to try and anticipate where the rally will peak as past moves often didn’t make much sense either but still kept going; although this time seems particularly unsustainable,” Craig Erlam, senior market analyst at OANDA, said.
It remains to be seen whether investors will be able to regain their trust in major cryptocurrencies at a time when the cycle of the Fed’s monetary tightening appears to be nearing an end.
According to data from the Financial Intelligence Unit here, Korea’s crypto trading volume came in at around 3 trillion won in the latter half of 2022, down by 43 percent from the first half of the same year.
Investors also put less money into their crypto trading accounts. According to the financial authority, they deposited 3.6 trillion won in crypto exchanges as of the end of last year. This is a drop of 38 percent from six months earlier. This was attributable to a sharp decline in investor confidence following the abrupt collapse of the once-promising Terra-Luna ecosystem in May and the global monetary tightening.
