|Bank of Korea Governor Lee Ju-yeol responds to questions by lawmakers at the National Assembly, Tuesday. Yonhap|
By Kim Yoo-chul
Bank of Korea (BOK) Governor Lee Ju-yeol said Tuesday that Tesla CEO Elon Musk's recent mass purchases of bitcoins caused the price of the best-known cryptocurrency to rise steeply.
"Regarding the recent steep price rise of virtual currencies including bitcoins, there are a lot of reasons behind the surges. Concerns over the possibility of looming excessive inflation could be cited as one reason, but the Tesla CEO's recent mass purchases of bitcoins and his latest comments over the possible availability of bitcoins for vehicle purchases have affected price moves," BOK Governor Lee told lawmakers at the National Assembly.
Lee remained negative over the natural value of virtual currencies and expected cryptocurrencies, including bitcoins, to experience sharp price volatility. "It's difficult to forecast the price moves of crypto assets," he said. "These assets saw a steep rise in the shortest period of time."
Regarding other factors affecting the price mechanism of bitcoins, the BOK chief said, "I would say institutional investors' assessment of using bitcoins as a hedge could be interpreted as another factor."
Musk's recent fondness of bitcoins rocketed the value of the cryptocurrency by almost 50 percent to more than $58,000. But its value dropped after Musk tweeted his concern that the price had risen too high too quickly. U.S. Treasury Secretary Janet Yellen also warned at a recent conference that bitcoins are an "extremely inefficient way of conducting transactions."
The BOK chief said the central bank is on track to enable the use of bank-controlled digital currencies. "The bank is close to completing our review of designs and relevant technologies regarding bank-controlled digital currencies," he told lawmakers.