Portland, US: Bitcoin surged 15 per cent, recovering from its lowest levels since May, amid a general risk-on rally in financial markets.
As is usually the case in cryptocurrencies, traders cited a bevy of reasons, from speculation that prices were being pumped ahead of the expiration of some weekly call options to the arbitrage of prices between various exchanges.
“This positive sentiment, along with a good buying opportunity at the key $7,500 support level, has led to there being more buyers than sellers — which, at the end of the day, always leads to markets going higher,” said Jeff Dorman, chief investment officer at Arca, a Los Angeles-based asset manager that invests in cryptocurrencies.
Bitcoin climbed to $8,574 in New York on Friday. The largest cryptocurrency dropped to $7,305 on Wednesday, the lowest in five months. Alt coins also rallied, with Ether jumping 12 per cent, Litcoin gaining 14 per cent and Zcash increasing 11 per cent.
“Though today’s jump is notable, it should be noted that this recovery is to the same level Bitcoin was trading before the recent pullback and puts BTC right back in a range where it traded for a nearly month until this week,” Dorman said Friday.
Cryptocurrencies may also get a boost after China’s state-owned news agency Xinhua reported the country plans to speed up development of blockchain technology and industry, citing President Xi Jinping. The government will strengthen the study of blockchain standardisation and increase investment in the sector, the report said.
Bitcoin dipped this week after Facebook Chief Executive Officer Mark Zuckerberg testified before the House Financial Services Committee on Wednesday. The proceedings highlighted the extent of the US government’s hostility toward the company’s Libra cryptocurrency initiative.
Potentially adding to concern was the news that Alphabet Inc’s Google has built a computer that’s reached “quantum supremacy,” performing a computation in 200 seconds that would take the fastest supercomputers about 10,000 years. Sceptics of cryptocurrencies have noted that advances in computing could make the slower proof of work system used by Bitcoin and other tokens obsolete.
Twitter Inc Chief Executive Officer Jack Dorsey weighed in with a tweet that could be interpreted as vote of confidence for Bitcoin: a screenshot with “buy” and “sell” buttons, the latter blotted out.