After breaking through the important $10,000 milestone on Sunday, Bitcoin, which had fallen to a low of $3,100 in December, broke through the $11,000 mark. Only a few weeks ago, both levels were thought to be exceedingly implausible. On Monday evening, the world’s largest digital coin by market capitalization, Bitcoin, was slightly under $11,000, having regained more than half of its record gain from the pinnacle of the crypto craze, when it was nearing $20,000 before plummeting over 75%.
As detailed in a detailed Bloomberg report, Bitcoin’s continued rise, which is also fueling rallies in Asian cryptocurrency stocks, demonstrates the currency’s resilience in the face of major skepticism, as well as cryptocurrency’s widening acceptance by major established companies like Facebook Inc. (FB), investment behemoth Fidelity, and others.
Cryptocurrency Has Been ‘Sitting on the Bench’
“Bitcoin’s recovery has been quite spectacular,” remarked George McDonaugh, CEO and co-founder of London-based blockchain and cryptocurrency investment firm KR1 Plc, to Bloomberg shortly after the virtual currency broke through the $10,000 barrier on Friday. It was the first time in almost 15 months that Bitcoin had hit that level. “Money didn’t abandon the asset; it simply sat on the sidelines, waiting to re-enter.”
According to The Wall Street Journal, some traders and ultra-bulls believe Bitcoin will reach $50,000.
This is due in part to a growing interest among the general public in cryptocurrencies and the distributed ledger technology that underpins them. Libra is likely the most well-known cryptocurrency initiative, as the social media giant collaborates with Visa Inc. (V) and Uber Technologies Inc. (UBER) to develop the system.
Along with the Bitcoin rally, Asian crypto-stocks are gaining traction.
According to another Bloomberg article, the crypto surge coincided with a rally in linked stocks in Asia on Monday. GMO Internet Inc. grew 7% in Tokyo, while Metaphs Inc. increased 11%, Remixpoint Inc. increased 6.2 percent, and Ceres Inc. increased 4.4 percent. Vidente Co. gained 5.4 percent, and Woori Technology Investment Co. gained 4.6 percent in South Korea.
Supun Walpola, a LightStream analyst, links Asian crypto-stock advances to Bitcoin’s revival. “We have seen going long on stocks that have exposure to cryptocurrency in the past during a Bitcoin/cryptocurrency bull run — especially with those who want to avoid the volatility of crypto but still want some exposure into these markets,” he said, adding that the increase in stock prices for these crypto companies typically increases more than the actual benefit that these firms would receive during a crypto surge. In an email to Bloomberg, Walpola noted that this had “always resulted in immediate revisions.”
Despite the lesser risk, investors should exercise caution before investing in crypto equities, as “similar tactics have frequently gone awry when crypto markets turn red — which might happen at any time,” according to the expert.
Even though Bitcoin has dropped below $11,000, it is still much above the $10,000 support level. The latest calls by Treasury Secretary Steven Mnuchin for new worldwide regulatory norms to bring cryptocurrency “out of the shadows” and prevent illicit financing by criminals, terrorists, and rogue nations will put Bitcoin’s – and other cryptocurrencies’ – 2019 resurgence to the test. According to another Bloomberg story, crypto bulls believe these laws will stifle the industry’s growth.
Despite rising cryptocurrency demand and evidence that the protracted “crypto winter” is gone, a slew of headwinds threaten to drag Bitcoin down below $10,000, putting the rest of the embryonic industry in jeopardy. As seen in May, these risks position the digital coin for continued volatility. Bears have noted the fact that bitcoins are largely used for speculation rather than commerce, among other factors, as a major concern.