Bitcoin Bulls Regain Upper Hand as Extinction Concern Subsides
(Bloomberg) -- Bitcoin recovered from the lowest level since June and scores of smaller digital tokens rallied as concern eased that investors are giving up on the virtual alternatives to cash after this year’s collapse in prices.
The biggest cryptocurrency gained as much as 9 percent to $6,619, helping to temper the losses over the past two days that drove this year’s decline to almost 60 percent. Ether climbed as much as 18 percent, while Ripple jumped as much as 16 percent. The total market capitalization of virtual currencies had dropped to about $190 billion, down from a peak of about $835 billion in January.
“The crypto market appears to be in its final stretch of its bearish state,” Chris Yoo, a portfolio manager at Black Square Capital, said in an email. “This correction is not unexpected due to the over-valued nature of many blockchain projects and regulatory uncertainty.”
Prices slumped Monday amid concern that tokens from initial coin offerings using the Ethereum blockchain were being dumped as the prospects for many of the projects dimmed. Even with the slide, Ethereum co-founder Joseph Lubin said this past year’s surge in the value of digital currencies was a bubble and the burgeoning ecosystem is stronger because of it even as prices tumble.
“We’ve seen six big bubbles, each more epic than the previous one, and each bubble is astonishing when they’re happening but when you look back they look like pimples on a chart,” Lubin said Tuesday during an interview on Bloomberg Television. “With each of these bubbles we have a tremendous surge of activity and that’s what we’re seeing right now.”
Bitcoin also seemed to draw support after bouncing off the $6,000 price level, a positive sign for traders and analysts who use technical analysis. Bitcoin repeatedly tested levels near $6,000 this year, only to recover each time.
©2018 Bloomberg L.P.