Bitcoin extends gains after retracing closely watched $30,000 mark
Bitcoin regained some of its footing, climbing above the $30,000 level, which some cryptocurrency traders see as a key support level.
The largest digital currency was up 3.4 percent and stood at around $30,800 as of 7:30 a.m. in London on Wednesday. Other cryptos also advanced, including Ether and Dogecoin, while the Bloomberg Galaxy Crypto Index was also in the green.
“The fear in the market was that if bitcoin breaks below $30,000, the price will go down violently,” said Naeem Aslam, chief market analyst at Ava Trade Ltd. “Actually, we haven’t seen that. The price of bitcoin has been stable, and we haven’t seen any panic selling.”
Bitcoin and other cryptocurrencies have declined since mid-May, losing nearly $1.3 trillion from their market cap. Bitcoin has faced a number of hurdles, including advancing regulatory scrutiny in China, Europe and the US, and concerns about the energy required by the computers powering it. Investors have also generally become more cautious about speculative assets.
Aslam of Ava Trade said that bitcoin could still test the $25,000 support level in the coming weeks.
Bitcoin’s advance has shrunk by nearly 6 percent this year after a record low of around $65,000 in April. This has been compared to a 15 per cent jump in the S&P 500 index in 2021.
Proponents argue that virtual currencies provide an inflation hedge and will gain wider institutional acceptance. Such narratives have always been controversial and are now under even greater question, although even the most ardent fans of bitcoin continue to predict huge long-term returns.
“Regulatory and environmental concerns may keep bitcoin overwhelming, but corrections on both fronts should occur before the end of the year,” Edward Moya, Senior Market Analyst for Americas at Oanda, wrote in a note. He added that institutional investors are “ready to make big long-term bets” if the $20,000 drop is avoided.