Bitcoin's surge to almost $8,000 rekindles memories of bubble
Bitcoin jumped to almost $8,000 and didn’t look back, as its longest winning streak since 2013 continued to rekindle the global cryptocurrency market.
Monday’s advance of as much as 26% comes only a few days after the digital asset broke through $6,000 and looks set to boost investor interest in conferences on the technology underlying the biggest crypto asset that are taking place in New York this week. Bitcoin’s latest surge started Saturday, when the two U.S. exchanges carrying futures are closed, making it potentially difficult for short sellers to cover their wagers.
“Bitcoin is acting differently since moving above its 200-day moving average” and the gains are occurring on strong volume, Fundstrat co-founder Tom Lee, a noted Bitcoin bull, wrote in an email. Blockchain Week is underway, co-sponsored by the New York City Economic Development Corp., and the Consensus forum is set to start, where people are “expecting a higher-quality conference,” Lee said.
With fundamental analysts often struggling to explain crypto markets, traders have recently pointed to institutions increasingly embracing digital coins. The likes of Fidelity Investments plans to buy and sell Bitcoin for institutional customers soon, and E*Trade is dipping into the trading space.
Adding to the optimism was speculation Monday that more mainstream companies such as eBay and Whole Foods are about to start accepting cryptocurrency payments. Bakkt, a venture that includes Intercontinental Exchange Inc. , said Monday it will begin testing Bitcoin futures in July.
“The largest crypto gathering in the world is going on right now, Consensys, and there’s Bakkt announced their futures product is going to be up and running in July,” said Travis Kling, founder of the Los Angeles-based crypto hedge fund Ikigai. “Before then there was not a concrete date on when the Bakkt product is going to be launched.”
Bitcoin climbed as high as $7,963, the most since July 2018. Rival coins surged in a broad rally, with Bitcoin Cash up as much as 40%, and Litecoin and Ether both at least 21% higher.
Hedge funds and other investors had increased their net short bet against Bitcoin in the week through May 7, the U.S. Commodity Futures Trading Commissions said Friday. When trading opened on Monday, futures traded on CME opened 12% higher.
While Bitcoin has more than doubled from its post-crash low, the crypto space is by no means free of headaches.
Binance, a large crypto exchange, reported a hack of 7,000 Bitcoins with about $40 million. The companies behind the digital exchange Bitfinex and the cryptocurrency Tether recently said that the so-called stablecoin is backed by cash and short-term securities only equal to 74 percent of the outstanding coins rather than completely pegged to the U.S. dollar.
And that’s aside from the volatility — Bitcoin peaked almost $20,000 in December 2017 before crashing back to earth in the succeeding months.
Based on the DVAN Buying Selling Pressure Gauge, the coin is seeing the most buying pressure since the rampant run-up in 2017. In addition, Bitcoin appears prime to retest its previous break of $8000 when it soared to $8500 a coin in July of 2018.