Middle East Tensions and Hawkish Fed Weigh Down! Upbit Trading Volume Dips Sharply, Retail Investors Hold Their Breath

▲ Middle East Tensions and Hawkish Fed Weigh Down! Upbit Trading Volume Dips Sharply, Retail Investors Hold Their Breath/AI Generated Image ©

Amid the global financial market freezing due to the combined uncertainties surrounding the second ceasefire negotiations between the US and Iran and concerns over the US Federal Reserve's (Fed) hawkish stance, the domestic virtual asset market has also entered a deep wait-and-see mode.

As of 6:31 AM on the 22nd, according to Upbit's KRW market, the largest domestic virtual asset exchange, major virtual assets, including Bitcoin (BTC), are stagnating in a narrow range, unable to find a clear direction. Bitcoin, the leading cryptocurrency, is taking a breather, trading at 112.26 million won, down 0.17% from the previous day. Ethereum (ETH), the leading altcoin, is up 0.06% at 3.433 million won, while XRP (Ripple) and Solana (SOL) also show limited volatility, settling at 2,115 won (up 0.28%) and 126,500 won (up 0.08%) respectively. The Upbit Composite Index (UBMI), which represents the overall trend of the virtual asset market, fell by 0.04%, while the altcoin index rose slightly by 0.20%, reflecting the intense market cautiousness.

The weakening of investment sentiment directly led to a decrease in trading volume. According to data from CoinGecko, a global market data aggregator, Upbit's total 24-hour trading volume at the same time showed a decline compared to the previous day, indicating a decrease in market vitality. This is interpreted as investors refraining from premature trading and observing the situation due to the confluence of geopolitical risks and macroeconomic uncertainties.

The sideways movement in the crypto market aligns with the overnight decline in the New York stock market. On the 21st (local time), the three major New York stock indices, including the Dow Jones Industrial Average, S&P 500, and Nasdaq, all closed down. Despite favorable first-quarter earnings announcements from major companies, geopolitical fears weighed on the market as the second round of negotiations between the US and Iran faced the risk of collapse ahead of the ceasefire's end. As a result, the Volatility Index (VIX), often called the 'fear index,' approached the market instability benchmark, reflecting extreme caution among investors.

Furthermore, the rise in US Treasury yields, triggered by hawkish remarks emphasizing central bank independence from Kevin Warsh, a candidate for Fed chairman, during a Senate hearing, also contributed to a decrease in the attractiveness of risk assets for investment.

The future direction of the market is expected to be entirely dependent on whether the geopolitical risks, currently shrouded in fog, are resolved. While some market participants express optimism based on the robust performance of the artificial intelligence and technology sectors, the market is currently dominated by major uncertainties: geopolitical crises stemming from the Middle East and concerns about prolonged high-interest rates. Consequently, until clear momentum emerges, major cryptocurrencies within the Upbit market are also likely to maintain a conservative trend, necessitating strategic risk management in preparation for increased volatility.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*