AFP-Yonhap
The price of bitcoin fell below the 100 million won range on the 5th, dropping by about 40 percent so far this year. It has declined to roughly half of last year’s peak (180 million won). Not only bitcoin but a wide range of virtual assets, including various altcoins, are trending lower. Opinions are sharply divided over whether this is a temporary plunge or the arrival of a ‘crypto winter’.
There is also a view that cryptocurrencies, whose ‘boom’ a little over a decade ago was led by ‘early adopters’, have now been folded into parts of the mainstream and thus no longer spark as much interest as before.
According to the industry on the 13th, one analysis is that reduced ‘scarcity’ is pulling prices down. The cap of 21 million units for bitcoin has long underpinned much of its price and value. However, as mainstream financial institutions roll out exchange-traded funds (ETFs) linked to cryptocurrencies and derivatives, investor perceptions are changing.
According to Coin Leaders, on-chain analyst Willy Woo said in a recent report that “the key driver moving bitcoin prices now is not spot holdings but ‘paper bitcoin’ represented by futures and derivatives,” adding that “the scarcity of bitcoin is being diluted by the vast liquidity of the derivatives market.”
Recently, not only precious metals such as gold and silver but also technology stocks tied to artificial intelligence (AI), as well as so-called ‘meme stocks’, have been climbing steeply, offering many alternatives that can substitute for crypto’s abundant volatility. Investor attention can be dispersed.
There is also a counterargument that this plunge is a temporary phenomenon rather than a structural shift. With Kevin Warsh, considered relatively hawkish on monetary policy, nominated as the next chair of the Federal Reserve (the Fed), bitcoin experienced a temporary drop along with assets such as gold.
Moreover, each of the past three crypto winters was triggered by an event that sparked a crisis of trust: the Mt. Gox exchange hack in 2014, the ICO (initial coin offering) bubble in 2018, and the Terra-Luna debacle and FTX bankruptcy in 2022. This time, however, there is no such catalyst, leading some to conclude it is hard to say winter has arrived. Jasper De Maere, a strategist at the crypto trading firm Wintermute, said, “The infrastructure has become more robust, adoption of stablecoins continues to increase, and institutional interest has not disappeared but is merely pausing,” adding, “interest in investing can return quickly.”
In fact, some institutional investors are maintaining a buying stance. Anthony Scaramucci, chief executive officer of the US hedge fund SkyBridge Capital, said in a talk held in Hong Kong on the 10th, “Ten days ago we bought at 84,000 dollars, last week at 63,000 dollars, and this week we are buying in an even lower range,” adding, “We remain buyers in this market.”
That said, skepticism is strong that the attitude of ordinary investors toward crypto itself has changed. In a February 11 article titled “Why has the coldest winter in crypto history arrived,” the British weekly The Economist wrote, “The hardest part to quantify is precisely that market sentiment has completely cooled.” For cryptocurrencies without real-world assets, the key determinant of value is human ‘psychology’. The Economist noted, “The once thrilling aura around digital assets seems to have vanished,” adding, “If the US president and his family are deeply involved in this asset class, how countercultural can it really be.”
Charles Hoskinson, a co-founder of the Ethereum blockchain platform, said last month, “We have all essentially become part of the system,” adding, “And being part of the system makes everything ‘uncool’.”
한글기사 원본(Original Korean Story)
