Wednesday, January 19

Bitcoin Stages Recovery – Moneyweb


Bitcoin is making a comeback along with other riskier assets on Monday, rebounding from its Black Friday lows.

The largest digital asset rose as much as 3.4% during the session to trade around $ 58,266. Other coins also posted snap-backs, with the Bloomberg Galaxy Crypto Index adding 5.5% at one point. So-called altcoins like Polkadot and Dogecoin also won.

Moneyweb Insider Gold

Join heated discussions with the Moneyweb community and get full access to our market indicators and data tools while supporting quality journalism.

R63/month or R630/year

SUBSCRIBE NOW

You can cancel anytime.

A brutal sell-off on Friday saw investors flee a number of riskier assets, including cryptocurrencies, and Bitcoin posted its worst day in about two months. The beating came after the announcement of a new variant of the coronavirus called omicron that was identified in southern Africa and that experts are now trying to understand. The session decline saw Bitcoin fall 20% below an all-time high recorded in early November, which for many strategists shows the currency’s tendency to closely follow the movements of the broader stock market.

“It highlights that Bitcoin is a risk-on / off asset,” said Matt Maley, chief market strategist at Miller Tabak + Co.

Meanwhile, in a development that is essentially Kryptonian, a coin called the Omicron crashed and later recovered when news of the variant of the same name spread. Although little is known about the coin so far, data from CoinGecko.com shows that it has been around for a few weeks and that its market capitalization is hovering around $ 370 million.

Bitcoin has been under pressure since hitting a record high of nearly $ 69,000 on November 10 due to enthusiasm for the first U.S. exchange-traded fund linked to digital asset futures. But a multitude of factors have influenced returns since then, including higher regulatory risks, as well as many tokens that have been depleted very quickly in a short period of time. Maley says that recent Bitcoin moves also show that if the Federal Reserve withdraws its stimulus more aggressively next year, cryptocurrencies could become vulnerable.

Fiona Cincotta, Senior Financial Markets Analyst at City Index, says that Bitcoin tends to act as a riskier asset that tracks movements in the stock market, but that there are times when that relationship is not as strong – for example, when is hotter than if expected inflationary impressions are obtained, Bitcoin can hold up well during those periods.

“So there are times when I think Bitcoin acts as a riskier asset and tracks the stock market higher, but there are also times when that is not necessarily the case,” he said by phone. “It has other contributing factors that drive it.”

Now nervous traders are turning to techies again for clues as to where certain cryptocurrencies might be headed. Bitcoin on Sunday bounced off its 100-day moving average, a medium-term trend line. Meanwhile, Ether on Monday broke out of its 50-day moving average, which many chart watchers see as a bullish development.

Still, Peter Tchir, head of macro strategy at Academy Securities Inc., says he was surprised by Friday’s Bitcoin sell-off based on the coronavirus news. To him, there seems to be a group of aggressive risk takers who own cryptocurrencies and probably own some high-flying tech stocks as well.

“They could be forced to sell one or the other if they move together,” Tchir said. “The rise of Bitcoin alleviates that pressure. Now that we’ve had what seemed like a likely rally, all dismissing omicron’s fears, we can see if it lasts. ”

© 2021 Bloomberg LP


www.moneyweb.co.za

Leave a Reply

Your email address will not be published. Required fields are marked *