Middle East war clouds and hawkish Fed hit! Upbit trading volume plunges, retail investors hold their breath

▲ Middle East war clouds and hawkish Fed hit! Upbit trading volume plunges, retail investors hold their breath/AI Generated Image ©

As global financial markets froze due to the combination of uncertainties surrounding the second ceasefire negotiations between the United States and Iran and concerns about the hawkish stance of the U.S. Federal Reserve (Fed), the domestic virtual asset market also entered a deep wait-and-see phase.

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 unable to find a clear direction and remain at par. Bitcoin, the market leader, is taking a breather, trading at 112.26 million KRW, down 0.17% from the previous day. Ethereum (ETH), the altcoin leader, recorded 3.433 million KRW, up 0.06%, while XRP (Ripple) and Solana (SOL) also settled at 2,115 KRW, up 0.28%, and 126,500 KRW, up 0.08%, respectively, showing limited volatility. The Upbit Comprehensive 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 fierce jockeying for position in the market.

The contraction in investment sentiment also directly led to a decrease in trading volume. According to data from CoinGecko, a global market tracking site, Upbit's 24-hour total trading value at the same time showed a decline compared to the previous day, indicating a decrease in market vitality. The combination of geopolitical risks and macroeconomic uncertainties suggests that investors are refraining from hasty trading and observing the situation.

The sideways trend in the crypto market aligns with the downward trend in the New York stock market overnight. On the 21st (local time), the three major New York stock market indices, including the Dow Jones 30 Industrial Average, S&P 500, and Nasdaq, all closed lower. Despite positive 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 collapse ahead of the end of the ceasefire. As a result, the Volatility Index (VIX), known as the 'fear index', approached the market instability benchmark, reflecting extreme caution among investors.

Furthermore, the rise in U.S. Treasury yields, triggered by hawkish remarks emphasizing central bank independence from Kevin Warsh, a candidate for U.S. Fed chairman, during his Senate hearing, also acted as a factor reducing the attractiveness of risky assets for investment.

The future direction of the market is expected to be strictly dependent on the resolution of geopolitical risks shrouded in fog. While some market participants express optimism based on solid performance in the artificial intelligence and technology sectors, the immediate market is dominated by immense uncertainties such as geopolitical crises originating from the Middle East and concerns about prolonged high interest rates. Ultimately, until a clear momentum emerges, major cryptocurrencies in the Upbit market are also likely to continue a conservative trend, requiring 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.*