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The rebound still leaves investors in the dark about what to expect for the cryptocurrency.
Bitcoin rebounded from Monday’s sharp drop that left investors looking for clues as to what to expect for the world’s largest cryptocurrency.
The digital coin rose 4.9% to $ 35,616 at 11:30 a.m. in London, after falling 11% yesterday. Latest episode of roller coaster volatility recalls past boom and bust cycles, including the 2017 bubble, and investors wonder if this is a healthy correction or the end of the last race bullish for cryptocurrencies.
“We think a pullback is healthy,” said David Grider, senior digital strategist at Fundstrat Global Advisors LLC, who added that he didn’t think recent price action indicates Bitcoin has already topped.
Investors who bought the digital coin a year ago are still sitting on gains above 300%. Identifying who is primarily responsible for the rally is one of the many crypto mysteries – Bitcoin funds, momentum hunters, billionaires, day traders, corporations and even institutional investors have all been cited.
Equally difficult is determining what caused the recent two-day 26% drop. For some, a rebound in the dollar may be one of the reasons. The greenback broke a prolonged losing streak after rising US government bond yields strengthened its appeal.
“There are signs that retail investors are making a profit,” said Ryan Rabaglia, global head of trading at OSL. “Increased volatility is often correlated with an increase in retail participation.”
At the same time, the world remains inundated with monetary and fiscal stimulus, and some of that wall of money could still gravitate towards crypto assets. Bitcoin enthusiasts continue to tout digital currency as a viable hedge against the risk of inflation and the potential downgrade of fiat currencies. Some forecasts for its long-term price range from $ 146,000 to $ 400,000.
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