The price of Bitcoin has recovered to the 10 million won (US$8,435) range.
The rebound is attributed to an increasing number of investors injecting money into cryptocurrencies amid increased variability in the global economy and global companies' moves to bring the virtual coin into the financial system.
Bitcoin is priced at 10.30 million won (US$8,688) per coin as of 2 p.m. on May 27, up 7 percent from the day before, according to domestic crypto exchange Bithumb.
It is the first time that the bitcoin price has hit the 10 million won (US$8,435) mark since May 10 last year. The bitcoin price, which reached the 20 million won (US$16,870) level earlier last year, plunged in February but recovered to the 10 million won (US$8,435) mark again in May the same year. However, it plummeted down below 4 million won (US$3,374) per coin earlier this year and continued to rise starting from this month to surpass 10 million won (US$8,435) on May 27.
The recent price rally is largely due to the increased interest in cryptocurrencies among global companies. In South Korea, Samsung Electronics Co. loaded a new cryptocurrency wallet onto its latest Galaxy S10 smartphone to make cryptocurrency payment simple. In other countries, JP Morgan Chase & Co. has issued its own cryptocurrency “JPM Coin” and Facebook is also planning to issue its own virtual currency next year and build a system to allow for purchasing via the coin.
More money is being invested in bitcoin as the cryptocurrency is recognized as a kind of risk-free assets due to the escalating trade dispute between the U.S. and China.
However, the domestic virtual currency market still shows stagnation, though the global market is heating up. Cryptocurrency information provider Coinhills said that the size of bitcoin traded in the Korean currency over the last 24 hours accounted for only 2.4 percent of the total transactions. The U.S. dollar and the yen took up most with 93 percent. An official from a domestic cryptocurrency exchange said, “The images of virtual currencies are too negative in Korea so investors are not inclined to invest in cryptocurrencies despite the rise in prices.”
Industry insiders believe that the cryotocurrency market could suffer a further decline in the second half of this year as financial authorities have announced plans to strengthen regulations. The Financial Services Commission (FSC) is planning to abolish “Guidelines for Anti-Money Laundering with Cryptocurrency” which has been implemented from earlier last year and improve the cryptocurrency regulation system through legislation. Since the guideline is valid until early July this year, the government is expected to accelerate the legislative process.
An official from a virtual currency firm said, “It is virtually impossible for cryptocurrency exchanges to have the same level of an anti-money laundering system as financial companies, except for large exchanges. If a new law is enacted, many small exchanges may disappear and the market could be frozen.”