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Good morning. Here’s what’s happening:
Prices: Markus Thielen, the CEO of Matrixport, notes that Bitcoin is steadily climbing, while the Korean market remains robust with diverse interests.
Insights: On Wednesday, the U.S. central bank is expected to increase the interest rate by 25 basis points. However, the question remains: will this mark the end of the central bank's monetary hawkishness? A crypto market analyst shares their perspective.
Prices
|
$28,644
+604.3 ▲ 2.2%
|
$1,869
+36.2 ▲ 2.0%
|
1,222
+20.5 ▲ 1.7%
|
|
S&P 500
4,119.58
−48.3 ▼ 1.2%
|
Gold
$2,025
+41.3 ▲ 2.1%
|
Nikkei 225
29,157.95
+34.8 ▲ 0.1%
|
A Resilient Korean Crypto Market
Good Morning, Asia.
As East Asia enters the business day, Bitcoin and Ether prices continue to surge, fueled by fresh concerns in the banking industry and better-than-expected jobs data. Bitcoin is starting the day at $28,644, while Ether has risen by 2% to reach $1,869."
While crypto traders keep a close watch on the latest U.S. economic data, a new story is emerging in Korea - and it's causing a disruption in one of the usual metrics.
Matrixport's Head of Research, Markus Thielen, mentioned in a recent interview on CoinDesk TV that Korea's cryptocurrency market, which caters primarily to retail investors, remains robust. Korean traders have shown particular interest in gaming, alternative cryptocurrencies, and notably, XRP, which continues to experience a surge in popularity within the Korean market.
"We have also seen this in the last bull market at the end of 2017, when Ripple accounted for 50% of all the volume, and it was predominantly traded in Korea," Thielen said.
Thielen also highlights that certain alternative cryptocurrencies, such as Mass Vehicle Ledger and Serum, are experiencing a significant surge in popularity within the Korean market.
Bitcoin, on the other hand, maintains its dominance at 48%.
However, despite this, data from CryptoQuant indicates that the Korean "kimchi" premium remains low. Without the purchasing power on Korean exchanges, the same price premium as before is not evident. This could be due to the fact that the market is now focused on other assets besides Bitcoin.
| Asset | Ticker | Returns | DACS Sector |
|---|---|---|---|
| Bitcoin | BTC | +2.2% | Currency |
| Ethereum | ETH | +2.0% | Smart Contract Platform |
| Polygon | MATIC | +1.5% | Smart Contract Platform |
| Asset | Ticker | Returns | DACS Sector |
|---|---|---|---|
| Dogecoin | DOGE | −0.4% | Currency |
| Terra | LUNA | −0.2% | Smart Contract Platform |
Insights
No End to Rate Hikes?
Could tomorrow mark the conclusion of the interest rate hikes as we have come to know them?
Oliver Rust, the Head of Product at Truflation, an inflation data aggregator, proposed in an email that it's a possibility.
On Wednesday, the U.S. central bank is anticipated to raise the rate by 25 basis points, marking the third consecutive time. In the last 14 months, the Federal Reserve has increased the rate by 525 basis points. However, it remains unclear whether it will persist with this aggressive monetary policy or scale back, as Rust noted in his email.
“With the US banking sector suffering a credit crunch following recent bank failures, and a buyout of First Republic…only just secured by US regulators and JP Morgan, the Fed will be weighing its rate decisions carefully from this point on,” Rust wrote. “However, if inflation refuses to budge, we could well see another hike, despite tighter credit conditions. It’s worth remembering that while a 5% inflation rate is lower than last year, it still points to rapid price rises from already elevated levels.
He added: “Even if this hike turns out to be the Fed’s last, we don’t expect rates to come down from these levels any time soon.”
Central bank critics have alleged that the current banking crisis has been fueled by excessively hawkish monetary policies by the Fed. These critics had been anticipating the bank to halt its series of rate hikes.
However, Rust pointed out that the Fed may have felt obligated to raise interest rates due to mixed signals indicating that the economy may still be overheating, potentially leading to uncontrolled inflation. Despite the JOLTS report showing weaker than expected job openings and labor turnover, the job market has remained strong.
He further commented that the current inflation rate of 5%, which has been consistently decreasing in the past six months, is expected to slightly increase due to OPEC's reduction in oil production and the surge in energy demand from China, following the reopening of its economy. “This increase is already being reflected in the prices of energy commodities,” he wrote.
Rust contends that in light of the current circumstances, an additional 25 basis point rate hike from the Federal Reserve is all but certain. However, he suggests that the central bank may take a more measured approach thereafter, in order to evaluate the economic impact of its decision. After all, a total increase of 500 basis points in interest rates since March 2022 represents a substantial shift that could pose significant challenges for any economy.
Important events.
8:15 p.m. HKT/SGT(12:15 UTC) United States ISM Services PMI (April)
Source Coindesk
