In one of its biggest price swings in months, bitcoin roared back from the dead on Wednesday to once again climb above US$7 000.
Bitcoin gained as much as 9.2%, its largest increase in eight weeks, as investors piled back in following an extended slump that had pushed it to the lowest level since May. The largest cryptocurrency had dropped to as low as $6 436 this week before staging a recovery to $7 226 in New York trading, a swing of about 12%.
“Markets are generally strong. It may be some profit taking in traditional assets, rotating into crypto. Also, it may be some trading around the unknown of the halving,” said David Tawil, president of ProChain Capital. “We won’t be sure that the bounce is real until it stabilises.”
The halving, estimated to take place around June 2020, cuts the number of coins awarded by 50% to the miners who run the computers that process those transactions. It is supposed to slow issuance to make the token less susceptible to inflation.
Cryptocurrencies were under pressure earlier in the week after Chainalysis, a researcher, said bitcoin is likely to sell off further as perpetrators of a $2-billion theft continue to dump coins to cash out.
But some analysts are forecasting a bitcoin recovery in the new year. Bloomberg Intelligence’s Mike McGlone, for one, chalks it up to the coin’s limited supply, among other things, as a primary driver of a potential price advance in 2020.
“Increasing adoption is the other side of the demand vs supply balance, and the first-born crypto is winning as it evolves into a digital version of gold,” he wrote in a note. — Reported by Vildana Hajric, (c) 2019 Bloomberg LP