Markets

Bitcoin hits $7,000 and rekindles global cryptocurrency market

Advance of 16 per cent comes days after digital currency broke $6,000 barrier

The price of bitcoin has more than doubled from its post-crash low. Photograph: Benoit Tessier/Reuters

Mon May 13 2019 - 14:22

Bitcoin jumped above $7,000 (€6,230) as its longest winning streak since 2013 continued to rekindle the global cryptocurrency market.

Monday’s 16 per cent advance comes only a few days after the digital asset broke through $6,000 and looks set to boost investor interest in conferences on the technology underlying the biggest crypto asset that are taking place in New York this week.

Bitcoin’s latest surge happened on Saturday, when the two US exchanges carrying futures are closed, making it potentially difficult for shortsellers to cover their wagers.

"Bitcoin is acting differently since moving above its 200-day moving average" and the gains are occurring on strong volume, Fundstrat co-founder Tom Lee, a noted bitcoin bull, wrote in an email. Blockchain Week is under way, co-sponsored by New York City Economic Development, and the Consensus forum is set to start, where people are "expecting a higher-quality conference," Mr Lee said.

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With fundamental analysts often struggling to explain crypto markets, traders have recently pointed to institutions increasingly embracing digital coins. The likes of Fidelity Investments plans to buy and sell bitcoin for institutional customers soon, and E*Trade is dipping into the trading space.

Blockchain

Earlier this month, the Bank of Canada and Monetary Authority of Singapore announced that they had sent each other digital currencies using blockchain technology.

The most well-known digital token went to as high as $7,324.64, up 16 per cent from Friday, according to composite prices compiled by Bloomberg at 7.52am New York time. Rival coins surged in a broad rally, with bitcoin cash up 26 per cent, and litecoin and ether both at least 12 per cent higher.

Hedge funds and other investors had increased their net short bet against bitcoin in the week through May 7th, the US Commodity Futures Trading Commissions said on Friday. When trading opened on Monday, futures traded on CME opened 12 per cent higher.

While bitcoin has more than doubled from its post-crash low, the crypto space is by no means free of headaches.

Binance, a large crypto exchange, reported a hack of 7,000 bitcoins with about $40 million. The companies behind the digital exchange, Bitfinex and the cryptocurrency tether, recently said that the so-called stablecoin is backed by cash and short-term securities only equal to 74 per cent of the outstanding coins rather than completely pegged to the dollar.

And that’s aside from the volatility – bitcoin peaked above $19,000 in December 2017 before crashing back to earth in the succeeding months. – Bloomberg

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