Bitcoin is back — and even bulls are befuddled.
The controversial cryptocurrency surged more than 20 percent on Wednesday — briefly climbing as high as $13,879.24 in the afternoon — as investors scratched their heads over what might be driving the eye-popping rally.
Bitcoin had dropped nearly $2,000 by late afternoon to briefly trade below $12,000, but it was still changing hands at levels not seen since January 2018, when the digital currency was in the middle of a fast retreat from the all-time highs near $20,000 it notched in December 2017.
Bitcoin’s recent rally began to accelerate on June 18, when Facebook disclosed plans to launch its own cryptocurrency called Libra early next year. The announcement sparked hopes that the social-media platform with 2.4 billion active users could help bitcoin in its struggle to appeal to the mainstream.
Other pundits have guessed that falling interest rates may be sending currency speculators out of the US dollar and into bitcoin. Nevertheless, most were at a loss to pinpoint a cause for the two-week rally, which has been largely uninterrupted since bitcoin traded at $7,600 on June 10.
“There’s no easy answer. There’s no fundamental reason,” Mark Newton, technical market analyst of Newton Advisors, told The Post. Still, he ventured that Facebook’s Libra “could be a gateway to bitcoin and could get people comfortable opening crypto accounts, even.”
Remarks this week by Federal Reserve Chair Jerome Powell show that regulators are taking a serious — albeit cautious — look at Libra, which could provide some validation for the cryptospace.
“Libra’s a new thing. We are looking at it very carefully,” Powell said Tuesday at an event hosted by the Council on Foreign Relations in New York.
“Given the possible scale of it, I think that our expectations — from a consumer protection standpoint, from a regulatory standpoint — are going to be very, very high,” Powell added.
But for all the attention Facebook has been getting for bitcoin’s rally, crypto-watchers have pointed to other reasons for its rapid rise.
While the late 2017 rally saw a lot of retail investors eagerly hopping in and out of bitcoin, this rally so far appears to be led by longer-term institutional investors.
“Institutional investors are coming in and there are discrepancies between supply and demand,” Marc van der Chijs, a longtime crypto investor and founder of First Block Capital, told The Post.
“Institutions can hold on longer [if there’s a drop] and wait for the next bull market,” van der Chijs said.
With bitcoin’s quick climb, many are wondering when there will be a pullback.
While this rally has been swift, it so far hasn’t been accompanied by breathless media coverage and phone calls from mom-and-pop investors, analysts noted.
“The people who were involved a year ago aren’t now,” Newton said. “When everyone talks about it, you want to head of the exit.”
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