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Bitcoin bounces strongly after hitting lowest since early March

World’s largest crypto rallies after dropping to the lowest level in seven weeks.
Illuminated mining rigs operate inside racks at the CryptoUniverse cryptocurrency mining farm in Nadvoitsy, Russia, on Thursday, March 18, 2021. The rise of Bitcoin and other cryptocurrencies has prompted the greatest push yet among central banks to develop their own digital currencies. Image: Andrey Rudakov/Bloomberg

Bitcoin rallied back Monday as investors took advantage of the lowest levels in seven weeks to pile back in.

The largest cryptocurrency headed for its biggest gain since Feb. 8 at around $52,700 as of 9:35 a.m. in London. At one point it rose as much as 10.4%.

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The digital asset had been mired in a two-week slump after reaching a record on April 14, buoyed by enthusiasm from the Coinbase Global Inc. listing. Technical warnings from Wall Street, coupled with the collapse of two crypto exchanges in Turkey at the end of last week, had depressed sentiment amid fears over a growing bubble.

Monday’s action shows some investors are buying the dip after a rout that pushed Bitcoin below its 100-day moving average.

“The world is moving from centralized to decentralized; if you believe in that theme, it means the drop is a great buying opportunity,” said Michael Sikorsky, chief executive officer and founder of Copia Wealth Studios, in a recent note. “Volatility has always created opportunity, and people keep being surprised by the new highs month over month and year over year.”

Billionaire Elon Musk, who in the past has affected prices with comments on Twitter, posted another potential reference to cryptocurrencies on Saturday. “What does the future hodl?” he asked, using a term often seen as meaning “hold on for dear life” that supporters use to refer to buying and holding their digital assets.

Bitcoin futures weren’t pricing much more in the way of further gains Monday. April contracts rose to $52,585, while those for May through September were mostly in the $52,000s, according to data compiled by Bloomberg.

“Bitcoin created a large gap down last week that could stick around far longer than bulls would want to see,” said Rick Bensignor, president of Bensignor Investment Strategies, in a note Monday.

Some cryptocurrency-linked stocks rose along with Bitcoin. Monex Group Inc. gained 7.1%, while Remixpoint Inc. increased 7% and Ceres Inc. added 6.1%.

Bitcoin has done well over the medium term, retaining a gain of about 80% year-to-date as big-name investors endorse it and institutions from Goldman Sachs Group Inc. to Bank of New York Mellon advance their offerings around cryptocurrencies. JPMorgan’s John Normand reiterated in a note Friday that Bitcoin’s ascent has been steeper than any other financial innovation or bubble of the past 50 years.

© 2021 Bloomberg

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