Bitcoin tops US$57,000 amid crypto's rally, resilience
Bitcoin climbed above US$57,000 for the first time since May as speculators bet that the largest cryptocurrency will retest the record highs reached earlier this year.
The digital currency rose as much as four per cent to US$57,661 Monday in New York before paring gains. It reached almost US$65,000 in April, and has roughly doubled this year. The Bloomberg Galaxy Crypto Index increased as much as 2.4 per cent on Monday.
As in past rallies, myriad reasons are being cited for the latest surge, from an easing of concern about regulatory efforts in the U.S. and China, as well as renewed optimism about a possible U.S. Securities and Exchange Commission approval of a Bitcoin exchange-traded fund.
Investors are particularly excited that a Bitcoin futures ETF may be soon be green-lighted by the U.S. regulator, as SEC chairman Gary Gensler has signalled openness to a fund focused exclusively on the derivatives-based product.
“A lot of investors and advisers have had crypto on their to do list, and are finally making the move with allocations that start with Bitcoin,” or crypto funds like the Bitwise 10 that invest heavily in Bitcoin, said Hunter Horsley, CEO of Bitwise Invest.
Bitwise has seen “hundreds” of advisers make their first allocations to crypto over the last several weeks, with many flocking to the asset class amid macro-fears about inflation and low yields, he said. Some strategists are also cheering the resilience of the Bitcoin as seen by the recovery in its so-called hash rate, a measure of computing power being contributed to the network, following China's latest crackdown on mining earlier this year.
As mining operations in China shut down, transaction processors across North America ramped up. A metric that tracks the hash rate's power has jumped 103 per cent since late June, according to a report from Luxor Technology Corp.
“Hash rate is being distributed around the globe with North America emerging as the new dominant hub,” said the report.
Analysts who look at patterns in price charts say that US$60,000 is the next level of resistance, though Bitcoin's relative strength index above 70 suggests that its now in overbought territory.