Bitcoin recovered from the lowest level since June and scores of smaller digital tokens rallied as concern eased that investors are giving up on the virtual alternatives to cash after this year’s collapse in prices.
The biggest cryptocurrency gained as much as 9% to US$6 619, helping to temper the losses over the past two days that drove this year’s decline to almost 60%. Ether climbed as much as 18%, while ripple jumped as much as 16%. The total market capitalisation of virtual currencies had dropped to about $190-billion, down from a peak of about $835-billion in January.
“The crypto market appears to be in its final stretch of its bearish state,” Chris Yoo, a portfolio manager at Black Square Capital, said in an e-mail. “This correction is not unexpected due to the overvalued nature of many blockchain projects and regulatory uncertainty.”
Prices slumped on Monday amid concern that tokens from initial coin offerings using the ethereum blockchain were being dumped as the prospects for many of the projects dimmed. Even with the slide, ethereum co-founder Joseph Lubin said this past year’s surge in the value of digital currencies was a bubble and the burgeoning ecosystem is stronger because of it even as prices tumble.
“We’ve seen six big bubbles, each more epic than the previous one, and each bubble is astonishing when they’re happening but when you look back they look like pimples on a chart,” Lubin said on Tuesday during an interview on Bloomberg Television. “With each of these bubbles, we have a tremendous surge of activity and that’s what we’re seeing right now.”
Bitcoin also seemed to draw support after bouncing off the $6 000 price level, a positive sign for traders and analysts who use technical analysis. Bitcoin repeatedly tested levels near $6 000 this year, only to recover each time. — Reported by Olga Kharif, (c) 2018 Bloomberg LP
