Bitcoin reminded investors of both its promise and peril in trading this weekend.
The world’s largest cryptocurrency rose to US$12 112 in trading just after 6am South African time, its first foray above $12 000 since August 2019. But it plunged shortly thereafter — 30 minutes after that high, it had dropped to $10 638.
It was at $11 104 as of 6.04pm South African time, according to CoinDesk pricing.
“Clearing resistance at $10 000 to $10 500, which coincided with the downtrend line from the late 2017 highs and first-quarter 2020 highs, established a higher high for bitcoin confirming a new tactical uptrend,” according to Rob Sluymer, technical strategist at Fundstrat Global Advisors.
“In the short term, bitcoin’s daily momentum indicators are overbought (as they are for gold), but beyond some very near-term choppy trading, bitcoin is likely to continue to trend to its next resistance level at $13 800.”
Rallied strongly
Bitcoin has rallied strongly in recent days after rising above $10 000. It had fallen as low as $4 904 in mid-March around the height of coronavirus-fuelled market uncertainty, but by mid-May was back around $9 000.
While cryptocurrencies’ volatility continues to attract sceptics, JPMorgan Chase & Co in June noted that bitcoin’s rally back from the March depths suggests it has staying power. The cryptocurrency’s notable moves both last weekend and this one recall a similar phenomenon in 2019, when outsized gains took place numerous times during Saturday and Sunday trading as the price rose from a few thousand dollars into five-digit range. — Reported by Joanna Ossinger, (c) 2020 Bloomberg LP