Bitcoin climbs above $11,000 as memories of popped bubble fade
Bitcoin traded above $11,000 for the first time in 15 months, recouping more than half of the parabolic increase that captured the attention of mainstream investors before the cryptocurrency bubble burst last year.
“The bounce-back of Bitcoin has been fairly extraordinary,” said George McDonaugh, chief executive and co-founder of London-based blockchain and cryptocurrency investment firm KR1 Plc. “Money didn’t leave the asset behind, it just sat on the sidelines waiting to get back in.”
Bitcoin surged as high as $11,251.21 on Monday, a 13% gain from late Friday that put it at the highest levels since March 2018. It was at $10,815 as of 7:10 a.m. in Hong Kong.
The largest cryptocurrency had a furious run higher in late 2017 that culminated with a top above $19,500, before an almost-as-relentless move downward over much of 2018. It languished around the $3,300 to $4,100 range for several months.
Bitcoin’s ride back accelerated in April, puzzling onlookers trying to pinpoint a reason for the surge. A study by Indexica, an alternative data provider, showed three main drivers: a more complex conversation surrounding Bitcoin, fewer concerns about fraud and a shift in the tense of how Bitcoin is talked about from the past to the future.
“The market has matured greatly since the last time Bitcoin crossed $10,000,” said Matt Greenspan, a senior market analyst at eToro. “This run is far more justified given the current level of adoption.”
In contrast with last year, there are now signs of renewed mainstream interest in cryptocurrencies and the underlying blockchain technology, most prominently Facebook Inc.’s Libra. The social-media giant is working with a broad group of partners from Visa Inc. to Uber Technologies Inc. to develop the system, which has already attracted attention and criticism from politicians raising privacy and security concerns.
The advent of Libra “is validating the crypto space and sending all the major digital coins higher,” said Edward Moya, chief market strategist at Oanda Corp. in New York. “Bitcoin volatility is likely to persist, with $12,000 and $15,000 as the next two critical resistance levels.”
Still, the speed of the rally has some observers warning caution is once again warranted.
To Whitney Tilson, founder of Empire Financial Research and a former hedge-fund manager, Bitcoin is “exhibit A” in the lexicon of “scams that enrich insiders at the expense of average folks.”
“Don’t get fooled by the dead-cat bounce this year,” Tilson said in comments last week. “Mark my words: A year from now, it will be a lot lower. This is a techno-libertarian pump-and-dump scheme that will end in ruin.”