Bitcoin climbs, finding floor
Cryptocurrency stabilises after worst sell-off since 2015
MADRID: Bitcoin rebounded along with most of the major cryptocurrencies, halting a four-day tumble that drew worldwide attention to the unregulated US $500bil market that’s frequently called a bubble.
The double-digit bounceback was strongest with second-tier digital coins. Bitcoin cash soared 21% and litecoin gained 12% as cryptocurrency traders regained optimism. They weren’t put off by comments published on Saturday from a central banker in Germany that “the risk of rapid losses” is obscured in cryptocurrencies.
“The enthusiasm hasn’t been destroyed,” Marc Ostwald, global strategist at Londonbased ADM Investor Services International, said by phone from Warsaw. “It’s a volatile market, and investors are hungry for that. They say everything else is boring.”
The broad recovery on Saturday coincided with a pause in bearish news that had snowballed since last Monday and shaved 24% off bitcoin’s value, its biggest four-day sell-off since 2015.
Comments by central bankers, a decision by litecoin’s founder to sell all his holdings and investors’ wishes to cut stakes before the holiday season fueled the plunge.
“With holidays approaching, some people want to step away from the table, and take their chips with them,” Ostwald said about the selloff. “Still, I wouldn’t want to put it down too much to rationality, because this is not a rational market.”
While bitcoin wasn’t the most volatile crypo-currency in the past week, it’s the largest, and it shook the world of digital-coin trading on Friday when its interday plunge reached 30%. That was the steepest dive since Jan 14, 2015, back when its market value was just US $2.4bil. On Saturday it was about US $260bil. Bitcoin advanced 10% to US$15,530 at 4:21 pm New York time on Saturday, compared with 24 hours earlier, according to data on coinmarketcap.com.
In a late-week comment that undercut confidence, Michael Novogratz, the former Goldman Sachs Group Inc and Fortress Investment Group LLC macro trader, said he’s shelving plans to start a cryptocurrency hedge fund.
He predicted that bitcoin may extend its plunge to US$8,000. Earlier this month he predicted it could reach US$40,000 within a few months.
Growing pains in the digital-coin world and warnings emerged all week, adding to volatility.
Coinbase, one of the larger trading platforms, on Friday said all buys and sells were temporarily unavailable before they were re-enabled, according to its website. There were no incidents reported Saturday. In South Korea, Yapian, the owner of bitcoin exchange Youbit, said last Tuesday it would close and enter bankruptcy proceedings after a cyberattack that claimed 17% of its total assets. There’s been a string of warnings by regulators for investors in digital coins.
“We are seeing a rapid rise in value, which hides the risk of rapid losses,” Bundesbank board member Carl-Ludwig Thiele said in a Euro am Sonntag report.