Bitcoin is headed for the biggest gain since April, providing some welcome relief to battered cryptocurrency investors — but it may be too soon to call a bottom.
That’s the assessment of Kenetic Capital’s Jehan Chu after the largest digital token rallied on Wednesday, climbing as much as 15% to US$4 339. It closed at $6 302 in October. Gains in ether, litecoin, Zcash and XRP helped propel the Bloomberg Galaxy Crypto Index to a 16% increase, paring this month’s rout to 30%.
“What we are seeing is not yet a bottom but a short-term buying opportunity,” said Chu, managing partner at Kenetic Capital, a blockchain investment and advisory company. “Until we have broader adoption of decentralised applications, it will be hard to find a firm floor.”
One technical indicator had suggested bitcoin was due a short-term bounce. The cryptocurrency’s relative strength index dropped to a record this month, according to Bitstamp prices that incorporate weekend trading, signaling it may have fallen too fast. — Reported by Eric Lam, with assistance from Matt Turner, Nancy Moran and Eddie van der Walt, (c) 2018 Bloomberg LP