Bitcoin Surpasses $11,000 as Memories of Popped Bubble Fade

By June 24, 2019 Bitcoin Business
Click here to view original web page at finance.yahoo.com
Bitcoin Surpasses $11,000 as Memories of Popped Bubble Fade More

(Bloomberg) -- Bitcoin traded above $11,000 for the first time in 15 months, recouping more than half of the parabolic increase that captured the attention of mainstream investors before the cryptocurrency bubble burst last year.

“The bounce-back of Bitcoin has been fairly extraordinary,” said George McDonaugh, chief executive and co-founder of London-based blockchain and cryptocurrency investment firm KR1 Plc. “Money didn’t leave the asset behind, it just sat on the sidelines waiting to get back in.”

Bitcoin surged as high as $11,251.21 on Monday, a 13% gain from late Friday that put it at the highest levels since March 2018. It was at $10,919 as of 11:01 a.m. in New York.

The largest cryptocurrency had a furious run higher in late 2017 that culminated with a top above $19,500, before an almost-as-relentless move downward over much of 2018. It languished around the $3,300 to $4,100 range for several months.

Bitcoin’s ride back accelerated in April, puzzling onlookers trying to pinpoint a reason for the surge. A study by Indexica, an alternative data provider, showed three main drivers: a more complex conversation surrounding Bitcoin, fewer concerns about fraud and a shift in the tense of how Bitcoin is talked about from the past to the future.

“The market has matured greatly since the last time Bitcoin crossed $10,000,” said Matt Greenspan, a senior market analyst at eToro. “This run is far more justified given the current level of adoption.”

Read more: Why Is Bitcoin Surging? Alternative Data Shows It’s Grown-Up

In contrast with last year, there are now signs of renewed mainstream interest in cryptocurrencies and the underlying blockchain technology, most prominently Facebook Inc.’s Libra. The social-media giant is working with a broad group of partners from Visa Inc. to Uber Technologies Inc. to develop the system, which has already attracted attention and criticism from politicians raising privacy and security concerns.

Read more: Facebook Wants Its Cryptocurrency to Rival the Greenback

The advent of Libra “is validating the crypto space and sending all the major digital coins higher,” said Edward Moya, chief market strategist at Oanda Corp. in New York. “Bitcoin volatility is likely to persist, with $12,000 and $15,000 as the next two critical resistance levels.”

Technical gauges followed by some traders suggest the rally may not be over soon. Bitcoin’s directional movement index is currently in the longest positive divergence since the 2017 euphoric rise. The DMI shows the direction of a price trend by charting the divergence between positive and negative levels. The index is currently in a strong positive divergence as seen by the divergence between the +DMI and -DMI indicators and the average directional index is above the pivotal 25 mark, which signals a strong trend and is tailing upwards towards 50 which indicates a very strong trend.

Still, the speed of the rally has some observers warning caution is once again warranted.

To Whitney Tilson, founder of Empire Financial Research and a former hedge-fund manager, Bitcoin is “exhibit A” in the lexicon of “scams that enrich insiders at the expense of average folks.”

“Don’t get fooled by the dead-cat bounce this year,” Tilson said in comments last week. “Mark my words: A year from now, it will be a lot lower. This is a techno-libertarian pump-and-dump scheme that will end in ruin.”

(Adds technical analysis of the price trend.)

--With assistance from Adam Haigh, Sarah Wells, Kurt Schussler and Kenneth Sexton (Global Data).

To contact the reporters on this story: Eric Lam in Hong Kong at elam87@bloomberg.net;Vildana Hajric in New York at vhajric1@bloomberg.net;Joanna Ossinger in Singapore at jossinger@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Ravil Shirodkar, Dave Liedtka

©2019 Bloomberg L.P.

Leave a Reply