Bitcoin Rallies Above $19,000 After Biggest Rout Since Pandemic

(Bloomberg) -- Bitcoin clawed back all of its losses from the biggest rout since March, showing a resiliency in a cryptocurrency rally that’s outperformed most major asset classes in 2020.

The most-traded digital coin rose over the weekend and added almost 5% more on Monday to $19,109. That topped its peak closing level reached last week, before prices started tumbling. A Bloomberg gauge of the biggest cryptocurrencies is up 13% from Friday.

“The Bitcoin correction didn’t last long,” according to Craig Erlam, senior market analyst at Oanda, who said the token may be poised for a new high. Entering “uncharted territory and the psychological boost that would come with a move like this could propel Bitcoin aggressively higher.” He is targeting $20,000 in the short term.

Bitcoin’s volatility was on show last week, when it crashed by more than $3,000 in just two days. The plunge triggered massive volume in spot and futures trading and drew particular attention because it began just hours after the currency failed to set a new intraday record. Strategists at JPMorgan Chase & Co. said that while the recent tumble cleared some speculative “froth,” further declines remain possible.

The futures market is proving that it’s becoming a more important risk-hedging venue for Bitcoin. Open interest on the CME Group platform has averaged 8,300 contracts in 2020 versus 4,000 last year.

Recouping sharp losses is not unusual for Bitcoin. The last time it dove 10% in one day, May 10, it took just four days to recover.

Bitcoin’s more-than-150% rally this year coincides with a steady flow of investments by institutions into the coin and into crypto infrastructure, from trading systems to custody. The latest was from Guggenheim Partners LLC, which said in a filing Friday it might invest up to 10% of its $5.3 billion Macro Opportunities Fund in a Bitcoin trust.

©2020 Bloomberg L.P.