Bitcoin is hanging tough amid a slew of negative headlines, extending its rally for the third day and lifting the spirit of battered bulls.
The largest cryptocurrency has rallied above its average price over the past 20 days, a positive indication for advocates who were looking for the digital token to reclaim its upward momentum. Bitcoin gained as much as 5% to $36 422 Tuesday in New York trading.
For many chartists, the next key level to watch is the 50-day moving average, which currently sits around $38 221. Should Bitcoin meaningfully break out above it, it could rally toward $40 000 again.
“Although we might be in for a few choppy months ahead we remain long-term very bullish in the sector and have no doubt that the market will recover quicker than most expect,” said Paul Barroso, chief executive and co-founder of Atani, a crypto trading platform. “Fundamentals remain very strong.”
The coin is rallying even in the wake of news that Binance Markets Ltd., an affiliate of top global crypto exchange Binance, was banned Sunday by the UK financial watchdog from doing any regulated business in the country. And Huobi, one of the most popular cryptocurrency platforms in China, said Monday that users in the country are prohibited from trading derivatives.
Other cryptocurrencies also gained Tuesday, with the Bloomberg Galaxy Crypto Index — which tracks a number of the largest digital assets — advancing as much as 6.6%.
Meanwhile, there are signs retail investors remain interested, according to Joel Edgerton, chief operating officer of bitFlyer USA. Buying volume has represented roughly 70% of total retail volume on his platform last week, he said in emailed comments, and more than 90% of transactions were buy orders. In addition, Edgerton is seeing an influx of new customers creating bitFlyer accounts.
“This behaviour is in-line with conversations with our customers, who see Bitcoin as a long-term investment rather than just short-term speculation,” he said. “While this volatility may be too much for many, those who understand the fundamentals and long-term value of Bitcoin see it as a great opportunity.”
At BTIG, strategists including Julian Emanuel and Michael Chu, reiterated a year-end price target of $50 000 for Bitcoin and $5 000 for Ether, writing in a note last week that they would “take advantage of the present weakness.” The rationale for a 1%-to-3% portfolio allocation toward digital assets “is stronger than ever,” they said, citing the “transformational power of blockchain” and “a store of value in an increasingly uncertain and inflation-prone world.”
Still, Bitcoin is roughly $28 000 off its all-time high reached back in April. While the coin’s recent slide commenced following complaints from mega-mogul Elon Musk that its environmental footprint is disastrous, a crackdown on the industry in China is also putting pressure on its price. One of the Communist nation’s latest broadsides came earlier this month, when the nation’s central bank said it had summoned officials from the biggest lenders as well as AliPay to reiterate a ban on cryptocurrency services. Chinese officials are already trying to root out crypto mining operations.
To Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, China’s clampdowns were a clear catalyst for its recent retreat.
“The most recent drawdown was precipitated by the Chinese crackdown on Bitcoin,” he said. “In the debate of whether Bitcoin is a true currency or just another speculative asset, the huge run-up and drawdown in just four months lends credence to the latter.”