Bitcoin rebounds from three-month low
NEW YORK (Reuters) – Bitcoin recovered from three-month lows below $6,000 in choppy trading on Tuesday. But worries lingered about a global regulatory clampdown and moves by banks to ban buying bitcoin with credit cards.
Investors swooped in after a steep fall. On the Luxembourg-based Bitstamp exchange, bitcoin hit $5,920, its lowest since mid-November, before recovering to above $7,000. It was last at $7,260 in late-morning trading in New York, up roughly 6% on the day.
“The recent weakness in bitcoin stems from tightening liquidity and near-term profit taking and does not reflect a change in the long-term outlook for the digital currency,” said John Sarson, the managing partner at Blockchain Momentum LP and ETF Momentum Investing in Indianapolis. “We view this sell-off positively, as we believe that lower prices will entice institutions to act quickly to adopt enhanced digital-asset services before prices recover.”
Bitcoin has slumped in recent sessions as a risk-off mood spread across financial markets. It has fallen about 70% from its peak of almost $20,000 in December and was down nearly 50% so far this year.
The original cryptocurrency gained more than 1,300% last year.
Other digital currencies also rose after posting steep losses the past few weeks. Ethereum, the second-largest by market value, was up 1.8% over the past 24 hours at $751.48, while the third-largest, Ripple, edged up 0.5% to 73 US cents, according to cryptocurrency tracker coinmarketcap. com.
The gains came amid a US Senate hearing on virtual currencies. The Senate is examining the role of the Securities and Exchange Commission and the Commodity Futures Trading Commission in regulating virtual currencies.
After a massive run-up last year, in which investors across the world piled into the market, cryptocurrency prices have skidded lower while regulators have stepped up warnings about the risk of investing in them.
Regulatory clampdowns in South Korea and India and an advertising ban by Facebook have hit sentiment. Several banks said in recent days that they were banning customers from buying cryptocurrencies with credit cards.
Still, many cryptocurrency backers said regulation should be welcomed and shortterm price volatility is to be expected for a new market.