Cryptocurrency reached highest level in almost a year
Bitcoin fell almost $1,500 within about 30 minutes of trading
Bitcoin is reminding investors of both its promise and peril in trading.
The world’s largest cryptocurrency surged to $12,112 in trading just after midnight New York time Sunday, its first foray above $12,000 since August 2019, according to pricing compiled by Bloomberg. But it plunged shortly thereafter — 30 minutes after the high, it had dropped to $10,638. It was up 1.2% to $11,224 as of 8:41 a.m. Monday.
“There are two factors that make this market particularly volatile. One is the low level of liquidity, which is one of Bitcoin’s hallmark traits due to digital scarcity. The second is an increasing amount of crypto exchanges who offer extreme leverage,” said Mati Greenspan, founder of Quantum Economics. “When traders get a bit over excited, they tend to pile on the margin, giving way to extra large liquidations and frequent shakeouts.”
Bitcoin fluctuates after wide weekend swings
Bitcoin has rallied strongly in recent days after rising above $10,000. It had fallen as low as $4,904 in mid-March around the height of coronavirus-fueled market uncertainty, but by mid-May was back around $9,000.
“Clearing resistance at $10,000-$10,500, which coincided with the downtrend line from the late 2017 highs and first-quarter 2020 highs, established a higher high for Bitcoin confirming a new tactical uptrend,” according to Rob Sluymer, technical strategist at Fundstrat Global Advisors LLC.
“In the short-term Bitcoin’s daily momentum indicators are overbought (as they are for gold), but beyond some very near-term choppy trading, Bitcoin is likely to continue to trend to its next resistance level at $13,800.”
While cryptocurrencies’ volatility continues to attract skeptics, JPMorgan Chase & Co. in June noted that Bitcoin’s rally back from the March depths suggests it has staying power.
The cryptocurrency’s notable moves both last weekend and this one recall a similar phenomenon in 2019, when outsized gains took place numerous times during Saturday and Sunday trading as the price rose from a few thousand dollars into five-digit range.
Other cryptocurrencies rallied as well. The Bloomberg Galaxy Crypto Index gained about 8% to 542. Ether rose 4.4% to $389, capping a torrid rally that has seen it advance in 13 of the last 14 sessions in data compiled by Bloomberg.
This article first appeared on Bloomberg