Is There a Chance That Crypto Market Starts to Rebound?
The cryptocurrency market recently started to reach its tops, after a hard period of time. Short-sellers walked out after a good week, and traders thought a couple of encouraging remarks from important investors would herald a turnaround in shaky sentiment.
Bitcoin surged 29 percent to the levels of $40,000, its highest level since mid-June, while ether touched a three-week high of $2,344. The move came on the heels of Bitcoin's greatest week in almost three months, putting the strain on short-sellers.
Elon Musk, a cryptocurrency enthusiast and Tesla CEO, stated last week that the carmaker will likely begin taking Bitcoin after conducting due diligence on its energy consumption. It had halted such payments in May, resulting in a steep drop in cryptocurrency prices.
Twitter CEO Jack Dorsey also stated last week that the virtual currency is a "huge part" of the media platforms company's future, while on Sunday, London's City AM publication claimed – citing an anonymous "source" – that Amazon plans to take Bitcoin payments before the end of the year. Amazon posted a job listing for a cryptocurrency product lead last week, sparking suspicion that it may accept digital coins for payment. However, later these rumors were fend off by official spokespersons.
Brokers claimed that the statements, taken altogether, were more than enough to ultimately push the market off the bottom of resistance, where it had been stuck since a May collapse, while data also showed large short-seller liquidations, implying that many had given up.
“We've witnessed overall approaching bullish sentiment in the market over the previous five market hours, supported by important technicals along with current favorable comments,” said Ryan Rabaglia, executive director of trading at digital asset platform OSL.
Bitcoin recently rose 8% at $38,064, bringing it within striking distance of the $41,341.57 top reached in June, only a week after hitting stability around $29,500. Ether was recently up 5% at $2,304.
Bitcoin is still around $27,000 off its mid-April peak of about $65,000. It's been harmed by complaints of the amount of energy required by the computer systems that power it, a regulatory campaign in China, and increased government attention in Europe and the United States.
Digital currency's surge boosted the value of other cryptocurrencies, with ether rising 5.9 percent to $2,3005. The surge comes after bitcoin recently dropped below $30,000 due to a worldwide stock market sell-off, raising concerns that it may go even worse.
“I believe we witnessed a time of buildup around 29-30K, signaling bullish sentiment and a possible climb over $40K for Bitcoin,” said Vijay Ayyar, director of business at digital currency Luno.
Musk stated that Tesla would most probably resume taking cryptocurrency for purchases when more bitcoin production shifts to renewable power. Tesla stopped cryptocurrency car orders in May, citing concerns over the “skyrocketing consumption of fossil fuels for mining bitcoin.”
Bitcoin mining is the time-consuming and energy-intensive method for generating new currencies that entails tackling complicated arithmetic problems. The computing power necessary to do so uses a significant amount of energy.
According to bitcoin mining expert Brandon Arvanaghi, these speculative swings have also contributed to a so-called "short squeeze."
Short traders gamble that the price of bitcoin will continue to decline. However, if the price rises, these traders try to reduce their losses and leave their holdings, which contributes to the price rising even more.
Nevertheless, some of the concerns that have been weighing on digital currency’s price have started to fade. China has recently increased its campaign on digital currencies, focusing on mining and commerce. Concerns about bitcoin mining's carbon emissions are also fading.
According to Luxor Mining's Brammer, the ambiguity regarding mining's ecological impact and Chinese Government regulatory worries has "gone off."