Bitcoin Hits Two-Week High in Cautious Crypto Market Recovery

Bitcoin extended a tentative rebound on Wednesday, climbing to a two-week high as traders look for signs that the wider crypto market may be regaining its footing after a prolonged selloff. Bloomberg's Mike McGlone joins to discuss with Paul Sweeney and Norah Mulinda.

Bitcoin extended a tentative rebound on Wednesday, climbing to a two-week high as traders look for signs that the wider crypto market may be regaining its footing after a prolonged selloff.

The original cryptocurrency rose as much as 2.6% to about $93,965, its highest intraday level since Nov. 17. Ether gained more, rising more than 4%, as Ethereum undergoes a network upgrade called Fusaka that aims to make the blockchain faster and more efficient. Other smaller tokens were mixed.

The digital assets market remains on shaky ground after a bruising selloff that began in early October, just days after Bitcoin hit a record of over $126,000. Since then, more than $1 trillion in crypto market value has been wiped out. Still, a measure of optimism is appearing with investors hoping the recovery can build.

“Bitcoin fans will be rightly cautious about this rally in the cryptocurrency, having seen so many false dawns in recent months, but it looks like the recovery in stock market risk appetite is finally leaching across into the crypto space,” Chris Beauchamp, UK chief market analyst at investment and trading platform IG, said in a note. “Last week’s bounce faltered at $93,000, so with the price nudging above this in early trading there is some hope of a more sustained move higher.”

Crypto traders have endured a bumpy ride this week. Token prices tumbled on Monday following comments by Strategy Inc.’s Chief Executive Officer Phong Le that the Bitcoin accumulator could resort to selling the cryptocurrency if needed to make debt payments. Strategy, formerly known as MicroStrategy, said later that it was establishing a $1.4 billion reserve to have cash readily available.

Bitcoin then regained ground Tuesday, with traders pointing to Securities and Exchange Commission Chairman Paul Atkins’ plan to unveil the measures behind an “innovation exemption” for digital asset companies, and Vanguard Group’s decision to allow exchange-traded funds and mutual funds that primarily hold cryptocurrencies to be traded on its platform.

Those events, coupled with a new bottom emerging for Bitcoin this week, have created “a series of vital signs of an upward trend forming,” according to FxPro’s Chief Market Analyst Alex Kuptsikevich.

Even so, caution has persisted, with some suggesting that investors bruised by the downturn may be reluctant to chase the move.

“We don’t see a ton of buyers on the top side,” said Sean McNulty, APAC derivatives trading lead at FalconX. “Sentiment is still fragile.”

One barometer of investor confidence is the group of 12 US-listed ETFs investing in Bitcoin, which recorded what McNulty called a “feeble” $59 million inflow on Tuesday, according to data compiled by Bloomberg.

The latest rally has led to liquidations of about $400 million worth of bearish bets across all tokens in the past 24 hours, Coinglass data shows.

“This rebound is actually just a relief rally,” said Melvin Deng, chief executive officer of QCP Group, in an interview on Bloomberg TV. But Bitcoin could “reclaim some momentum” from here, he added. “This is a great point for those who are under-deployed to look at some entry level.”

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