CPI Shock Drags Down Bitcoin and New York Stocks Together

Park Ji-won and Kim Dong-hwan are hosting, and reporter Park Hyun-young of News1 is appearing as a guest on this episode.

The hosts introduced the guest's background, noting that Park studied law and has continued reporting on the coin market. They then said today's topic would be the reasons behind the recent market decline.

Host Park Ji-won described the price swing as happening within roughly an hour. The decline was around 2%, and it was noted that this is not especially large.

New York stocks were also affected by the inflation data, and all three major indexes closed lower. Domestic stocks, with the KOSPI and KOSDAQ falling more than 7%, made bitcoin's decline look relatively small by comparison.

Core CPI, which excludes food and energy, also came in higher than expected year over year, putting pressure on both stocks and bitcoin.

Park Hyun-young reported that New York's three major stock indexes closed lower after the U.S. consumer price index (CPI) came in above forecasts. She said gasoline price increases accounted for more than half of the rise in prices, and that core CPI, which excludes food and energy, also came in higher than expected year over year.

According to the CME FedWatch tool, the probability of a rate hike this month briefly climbed to 53% before falling to 32% as Wall Street forecasts emerged calling for a hold in October and a possible hike in December. Still, because CPI beat expectations, caution in the market remains.

Most of Wall Street had expected core inflation to come in at 0.2%, but the actual release was 0.3%. Host Kim Dong-hwan described it as a shock, like being hit from behind.

Some pointed out that the market's reaction was large relative to a 0.1-percentage-point gap. The view was that in the past, markets did not fall sharply even when forecasts missed by nearly a full percentage point, but this time several negative factors overlapped.

Gasoline and diesel prices are rising, a trend that cannot be seen from WTI or Brent crude prices alone.

Diesel passes through more strongly into core inflation, so analysts said it adds significant price pressure. The conclusion was that the inflation problem will be hard to solve unless the war is resolved.

There had been talk that President Trump would back away from the war after the midterm elections, but it was also suggested that a heavy defeat in the midterms would make it harder to press ahead with the war.

The U.S. AI sector is currently leading the market. If leading stocks fall, investors may sell them to buy the rest of the market, or buy the rest to fill their positions in leaders.

Since yesterday, as stocks fell, Treasury yields also fell. Despite rate-hike pressure, yields declined, which was interpreted as a money move, with investors selling stocks to buy bonds. The 10-year Treasury yield dipped intraday to 5.23%.

Many investors still expect an "Uptober" because bitcoin has often risen in October. On-chain indicators also showed hopeful signs.

Bitcoin held on exchanges fell about 1.7% from mid-September. Individuals sending bitcoin to exchanges is usually seen as a signal of intent to sell, and that flow was not strong. Whale investors also continue to hold rather than sell, so although the support level has broken, it is too early to give up hope.

Others countered that the market has already been shocked and may take it less hard.

Trump had mentioned lifting sanctions on Russia to buy diesel and other refined products, but it was explained that shipping them from Russia to the U.S. takes time, so the plan is not moving smoothly. It was also noted that it is difficult to crack down too strongly on the so-called shadow fleet carrying Iranian crude.

Previously, many blockchain projects built their own layer-1 networks and issued coins on top of them. However, independent networks must build their own validators and security infrastructure, which is costly.

Projects with limited funds are increasingly joining large projects. One project, Data Network, moved to Solana and swapped its existing coins one-to-one. Last month, Zeta Chain also shut down its own chain and moved to Solana.

Andreessen Horowitz (a16z) predicted earlier this year that a winner-takes-all dynamic would emerge in the blockchain ecosystem, with only large projects surviving.

In the past, many projects emphasized technical strengths such as transaction speed and scalability. Now, places that already have many users have become more advantageous.

Panelists assessed that the industry is realizing that people need to gather in one place, more than the features themselves.

One project has established itself as a layer-1 network but lacks apps to run on it. Soo Labs invested 40 billion won in it and became its largest shareholder. It was interpreted as buying an external ecosystem because the project lacked its own app ecosystem.

There was also a forecast that in the long run, only a small number of large blockchains are likely to survive. However, the panelists said they have not yet seen this approach work well.

Many coin projects earn money through financial plays rather than by running businesses like Web2 companies. A common approach is to buy tokens in bulk when prices are low, then sell them in a rising market to take profits.

The hosts predicted that, without a clearly defined business, projects would take profits when prices rise. However, it was noted that this is the hosts' own view.

According to data from the office of Rep. Park Min-gyu, the number is now 3,979. That works out to a drop of about 60% in one year.

One explanation is the decline in prices. It was also suggested that ahead of taxation, some may have moved to overseas exchanges or platforms such as Hyperliquid.

This contradicts the conventional view that crypto belongs to people in their 20s and 30s.

High-value holders were still shown to use Upbit heavily. Given that Bithumb runs programs for VIP and other high-value holders, this stands out.

Upbit's overall market share has fallen to 62%. However, among large holders with more than 1 billion won, Upbit still holds 75%.

Large holders are seen as choosing Upbit because they value quick order execution. Highly liquid coins such as bitcoin, ethereum, and XRP can be sold in large volumes, but altcoins are hard to sell even at 100 million won, it was explained.

The number of holders above 1 billion won fell 60% in one year, while coin prices fell about 40% over the same period. Since price declines alone do not explain it, it was suggested that around 20 to 30% may have moved to other investments.

It was also mentioned that large sums are hard to withdraw from exchanges at once and must be taken out over several days. The panelists also said they feel that both the number of viewers of the broadcast and how often the topic is discussed have clearly declined.

It came right after a related article was published about his failure to answer questions on staking adequately during a parliamentary audit.

Whether crypto taxation takes effect ultimately depends on National Assembly discussions at year-end. During the audit, Lim maintained that he would follow the National Assembly's decision. Some expect that his move to the government could speed up taxation, since coordination with the Ministry of Economy and Finance and others would become easier.