Bitcoin Liquidity Conditions Under Global Tightening Pressure

The environment for risk assets, which had relied on ultra-low interest rates and excess liquidity, is now facing global tightening pressures. The U.S. Federal Reserve and major central banks are raising interest rates and withdrawing liquidity, with Japan's interest rate hike being highlighted as a symbol of global tightening. Geopolitical risks in the Middle East and energy shocks are increasing cost pressures, while fluctuations in commodity prices affect import prices and expected inflation. The Bank of Korea raised its benchmark interest rate to 2.75% in July, increasing the repayment burden on households, self-employed individuals, and the construction industry. The polarization of the real economy in South Korea has been pointed out as a problem, with high inflation negatively impacting small and medium-sized enterprises and private consumption. In this rising interest rate environment, issues of household debt and marginal firms are becoming more pronounced, and the rise in the won-dollar exchange rate could exacerbate price pressures. The crypto market is more sensitive to changes in the 'price of money' than to interest rate changes, and rising market interest rates could increase leverage costs. Policy responses are focused on selective support for vulnerable sectors and debt reduction, with calls for deleveraging. The next decision on the benchmark interest rate by the Bank of Korea is scheduled for August 27.

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