Musk’s latest tweet on potentially allowing Bitcoin transactions for Tesla sent the currency surging nearly 10 percent.
Bitcoin is fighting back from its latest downslide that stoked fears of a mass liquidation after the world’s largest token broke below $30,000.
The virtual currency rose as much as 5.8% to $33,821 in Wednesday trading — one day after dramatic rout briefly wiped out gains for the year.
“Fundamentals are healthy and there is too much negativity priced in,” said Felix Dian, who runs crypto-focused fund at MVPQ Capital in London. “Derivatives data, including backwardation in futures, tell us that there is a strong short base at the moment, making any leg lower unlikely to be durable as shorts get squeezed.”
For the past month, Bitcoin has been trapped within a range of the mid-$30,000s, suggesting that the enthusiasm for digital assets is starting to fade.
Regulators are also stepping up scrutiny of the industry. China’s latest broadside came Monday, when the nation’s central bank said it had summoned officials from the biggest lenders as well as AliPay to reiterate a ban on cryptocurrency services.
Even so, crypto-related investment products continue to be rolled out. The Bitcoin Fund listed on the Nasdaq Dubai exchange Wednesday, the first of its kind to trade in the Middle East. The fund traded up 11% from the reference price.
“Given the amount of focus on the $30,000.00 digital Armageddon level, I suspect the smart money moved their stop losses lower,” Jeffrey Halley, senior market analyst at Oanda Asia Pacific Pte. “Sitting just shy of $34,000.00 now, it has probably weathered the storm in the near term.”
He cites levels below $28,000 as a trigger for a mass exodus from Bitcoin.