Bitcoin soars above US$50,000 in rebound from last rout

By March 4, 2021Bitcoin Business
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HONG KONG • The bitcoin held gains above US$50,000 in Asia trading yesterday, putting the largest cryptocurrency back on track after steep losses last week, with bullish momentum returning again on more mainstream interest.

The digital token rose as much as 1.7 per cent and was trading at about US$50,976 as of 11.14am in Hong Kong yesterday, according to data compiled by Bloomberg. The coin had surged as much as 11 per cent during trading in the United States on Wednesday.

The cryptocurrency has been volatile, with prices plunging 21 per cent last week before recovering with the earlier broad bounce back in global equities. On a technical basis, the GTI Global Strength Indicator, which detects trend fluctuations, has begun to curl upwards, suggesting a bullish move for the bitcoin. The coin is up 13 per cent this week.

"With the return of the stimulus fuelling activities in the US and elsewhere - this is very good for scarce assets such as bitcoin," said Mr Antoni Trenchev, managing partner and co-founder of Nexo in London, a crypto lender.

More big-name investors are backing crypto. Bloomberg said on Tuesday that billionaire hedge fund manager Marc Lasry and former US Commodity Futures Trading Commission (CFTC) chairman Christopher Giancarlo have invested in crypto-asset and blockchain investment firm BlockTower Capital.

The bitcoin and other cryptocurrencies are also driving interest from mainstream investors in Canada, as the introduction of bitcoin exchange-traded funds helped drive US$5.2 billion (S$6.9 billion) in inflows in February, the second-highest month of such flows on record.

"Bitcoin is now, for the most part, steadily getting constant endorsements," said Oanda senior market analyst Ed Moya. "You're still in the early stages of this institutional interest and that's why I think you're probably going to have people become a lot more open-minded to cryptos."

The investments underscore a growing trend of institutional money flowing into the digital space, which is simultaneously gaining attention from regulators as the nascent industry seeks to carve out a place in mainstream finance. The outlook for the cryptocurrency industry is still under fierce debate. Proponents point to growing institutional adoption while critics say the bitcoin is a giant bubble destined to burst like its 2017 boom and bust cycle.

On Tuesday, Mr Gary Gensler, nominee for chairman of the US Securities and Exchange Commission, said that making sure crypto markets are free of fraud and manipulation is a challenge for the agency.

Mr Gensler, who served as a CFTC chairman during the Obama administration, has been viewed as a strong advocate for digital assets. He serves as a senior adviser to the MIT Media Lab Digital Currency Initiative and teaches about blockchain technology and digital currencies.

Mr John Wu, president of blockchain technology firm Ava Labs, said: "While the bitcoin market reacted quickly to his comments, Mr Gensler was largely positive about bitcoin and cryptocurrencies. I'm hopeful the new administration will help foster innovation in blockchains, cryptocurrencies and digital assets, instead of stifling it."

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