Bitcoin Prices Surge More Than 25% As Cryptocurrencies Recover

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Bitcoin prices recovered today, rising more than 25%. Shutterstock

Bitcoin prices rose more than 25% today, climbing higher after suffering a sharp sell-off over the last few days.

The digital currency surged to as much as $3,747.73 during the session, after plunging to $2,951.15 earlier in the day, according to the CoinDesk Bitcoin Price Index (BPI).

Because of this sharp increase, Bitcoin prices climbed roughly 27% in less than seven hours. 

Before starting this recovery, the cryptocurrency shed more than 32% between September 12 and today, additional BPI figures show.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

Crypto Market Sell-Off

Bitcoin fell as the broader digital currency space suffered a sell-off.

Earlier today, the total market capitalization (market cap) of these digital assets fell to $97.6 billion, the lowest since the beginning of August, CoinMarketCap figures show. 

After this sharp decline, the total market cap of these cryptocurrencies was down more than 45% from its all-time high of nearly $180 billion, additional CoinMarketCap data reveals.

Bitcoin Bounces Back

As for what caused Bitcoin prices to recover following their sharp drop, the simplest explanation is that traders over reacted to the latest news out of China and oversold the currency.

After Bitcoin prices fell to their recent low below $3,000, traders simply recognized the opportunity and purchased the digital asset, causing its price to rise sharply.

Brad Chun, chief investment officer at Shuttle Fund Advisor, was in this camp, asserting that Bitcoin prices bounced back after suffering their recent decline.

‘Classic’ News Trading

Lucas Geiger, founder and CEO of Wireline, provided similar input, describing the situation as “the classic crypto regulatory news trading pattern.” 

He speculated that an influx of retail investors has amplified the situation of crypto markets being fueled by the latest news.

More experienced traders hold in response to regulatory speculation, asserted Geiger, contending that this helps give Bitcoin prices a floor during these panic-driven price declines.

‘Buy The Rumor, Sell The News’

Tim Enneking, managing director of Crypto Asset Management, offered a slightly different perspective on Bitcoin’s latest price movements.

He emphasized that while the saying “buy the rumor and sell the news” provides a great explanation of activity when news is good, the opposite is true in this case, as the latest news out of China is not positive.

Huobi and OKCoin recently announced that by the end of next month, they will stop offering yuan-based trading, CoinDesk reported. 

Going Forward

While the narrative has at sometimes been that China dominated Bitcoin trading, that perception has shifted as the nation’s authorities have begun cracking down on the jurisdiction’s exchanges.

Even though the major Chinese exchanges have announced that they will soon make significant changes to their trading, cryptocurrency trading is available at exchanges across the world.

Bitcoin’s Sharp Rally

Further, even though Bitcoin prices did plunge more than 30% in the space of a few days, they are still far higher year-to-date.

The digital currency’s price has risen astronomically this year, climbing above $5,000 earlier this month.

Even its sharp drop, Bitcoin has climbed more than 250% YTD, outpacing many other assets.

Disclosure: I own some Bitcoin and Ether.


Source: Forbes

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