Bitcoin nears all-time high… Will the Chuseok jinx be broken this year?

Bitcoin (BTC), the cryptocurrency with the largest market capitalization, continued its surge this week, nearing an all-time high. Investors are watching to see if the so-called "Chuseok jinx," which has seen BTC prices decline every year around Chuseok, can be broken this year.

According to CoinMarketCap, a cryptocurrency market monitoring site, as of 12:45 PM on the 4th, BTC was trading at $122,171.35 per coin, up 1.43% from the previous 24 hours. This marks the first time BTC has surpassed the $122,000 mark, roughly two months ago, in mid-August. The gap with the previous all-time high of $124,457.12, recorded on August 14th, is only 1.94%.



This week's sharp rise in Bitcoin is paradoxically attributed to the temporary shutdown of the U.S. federal government. CNBC, a U.S. business media outlet, reported that "as political and economic tensions intensify, investors are turning to alternative assets like Bitcoin and gold." Cointelegraph, a cryptocurrency media outlet, also noted that "the closure of federal government agencies and delays in the release of key economic indicators have constrained the Federal Reserve's (Fed) policy decisions, increasing the likelihood of speculative capital flowing into cryptocurrencies."

Accordingly, market attention is focused on whether BTC's Chuseok jinx can be broken this year. The Chuseok jinx refers to the past trend of BTC prices falling during the Chuseok holiday. From 2017 to last year, BTC prices have consistently fallen around Chuseok. The primary reasons cited are increased cash demand during the holiday, leading to selling by individual investors, and thin trading volume during the holiday period.

During the Chuseok holiday last year, which lasted from September 14th to 18th, the Bitcoin price fell approximately 3% from $60,620 to $57,767 on the 17th, the day of Chuseok. The decline was even greater in 2021. BTC, which was priced at $48,850 on September 18th, the first day of the holiday, experienced a steep decline just before Chuseok, plummeting 17% to $40,554 on the 22nd. From 2017 to 2020, the price continued to decline by around 5% before and after the holiday.

However, some analysts argue that the recent globalization of BTC and the increasing presence of institutional investors are diluting this pattern. Indeed, during the Chuseok holidays of 2022 and 2023, BTC prices actually rose, weakening the jinx. BTC, which was $19,183 on September 9th, the first day of the holiday in 2022, jumped 17% to $22,391 on the 12th. The price also rose by over 8% during the Chuseok holiday in 2023.

Experts agree that while it's difficult to say for sure whether the Chuseok jinx will repeat itself this year, the holiday's characteristically slow trading environment could increase volatility. Kim Byung-jun of Dispread Research analyzed, "During the holiday, institutional investor participation decreased, reducing market liquidity. This, coupled with a partial increase in demand for cash outs from individual investors in preparation for the holiday, is likely driving down BTC prices."

Kim Min-seung, head of Korbit Research Center, stated, "It's difficult to conclude that the Chuseok jinx is a fixed pattern because there aren't many cases yet." However, he added, "While institutional investors don't directly participate in BTC trading in Korea, professional investors do exist, and their activity may decrease during the holiday, increasing volatility." He continued, "The fact that Korea's Chuseok holiday coincides with China's Mid-Autumn Festival holiday could also impact price declines. Furthermore, if variables like the U.S. federal government shutdown this year are added, it could impact price volatility."

If BTC establishes the $120,000 level as a new support level, some predict it could reach a new all-time high in the fourth quarter of this year. An analyst at Bitfinex, a global cryptocurrency exchange, stated, "BTC's march to an all-time high is unfolding in a fairly organic fashion. In particular, the recent easing of inflation and the Federal Reserve's dovish stance are increasing preference for risky assets like cryptocurrencies." He added, "With continued capital inflows into cryptocurrency spot exchange-traded funds (ETFs), barring unexpected macroeconomic indicators, there's a good chance BTC will reach a new all-time high in the fourth quarter of this year."

Reporter Kim Jeong-woo