Bitcoin jumped, rising in a matter of minutes to its biggest daily gain since July, and other digital currencies surged in a shock rally that followed the largest monthly decline since May.
The largest cryptocurrency gained as much as 10% to US$47Â 884 early in New York trading before paring gains. Ethereum, litecoin and EOS also jumped. Bitcoin had slumped 7.6% in September amid concern about increasing regulatory pressure in China and the US.
Traders offered a variety of possible reasons for the gains, while noting that the fractionalised market leaves digital assets vulnerable to volatile price swings. Some pointed to Federal Reserve chairman Jerome Powell’s comments on Thursday that the central bank had “no intention” to ban cryptocurrencies, while other cited price levels such as moving averages that are closely watched by technical analysts.
“We could be seeing the beginning of some de-correlation with traditional markets here,” said Vijay Ayyar, head of Asia-Pacific with cryptocurrency exchange Luno. “Early to say though. But that whole narrative that didn’t play out all of last year might just be taking shape. Especially since a lot of the uncertainty with regards to the US debt ceiling, China clampdown, etc. Crypto seems to be in its own bull cycle and continuing higher.”
Powell said in a US congressional hearing on Thursday that he had “no intention” on banning cryptocurrencies. He did, however, add that stablecoins might be appropriate for regulation.
To the charts
Despite falling in September, bitcoin posted a 25% gain in the third quarter. That compared to a drop of 41% in the prior three months.
Technicians turned to the charts for clues as to where bitcoin could go next. Antoni Trenchev, managing partner and co-founder of Nexo, a crypto lender, said he was encouraged that the swift move took bitcoin above its 20-, 50- and 200-day moving averages in one quick pass.
In addition, the MACD gauge — or the moving average convergence divergence — has turned positive, confirming the upward sentiment shift. But, Trenchev added, “be cautious, sudden accelerating price action can hastily unwind”. — Reported by Vildana Hajric and Cecile Gutscher, (c) 2021 Bloomberg LP
