Bitcoin tumbled after China said it had summoned bank chiefs to reiterate ban on providing cryptocurrency services.
Cryptocurrencies popped to the top of recent ranges as short-sellers bailed out in the wake of a strong week and traders hoped a handful of positive comments from influential investors might signal a turnaround in fragile sentiment.
Bitcoin rose Monday as far as 12.5 percent to hit $39,850 – its highest since mid-June – during the Asia session, while ether hit a three-week peak of $2,344. On the heels of Bitcoin’s best week in almost three months, the move put the squeeze on short-sellers.
Last week, cryptocurrency enthusiast and Tesla boss Elon Musk said the carmaker would likely resume accepting Bitcoin once it conducts due diligence on its energy use. It had suspended such payments in May, contributing to a sharp crypto selloff.
Twitter boss Jack Dorsey also said last week that the digital currency is a “big part” of the social media firm’s future and, on Sunday, London’s City AM newspaper reported – citing an unnamed “insider” – that Amazon is looking to accept Bitcoin payments by year’s end. Amazon last week advertised a job vacancy for a digital currency product lead, stirring speculation it might accept digital coins for transactions.
Brokers said that, taken together, the remarks were enough to finally lift the market from the floor of support where it has held steady since a May plunge, while data also pointed to heavy short-seller liquidations – suggesting many might have given up.
“Over the last five trading sessions we’ve seen general near-term bullishness in the market, driven by key technicals, as well as recent positive comments,” said Ryan Rabaglia, global head of trading at digital asset platform OSL.
“With a record $1.2bn in shorts liquidated over the past 24 hours, the outlook and momentum for the week ahead is positive,” he said.
Bitcoin was last up 8 percent at $38,064, putting it within sight of resistance around June’s $41,341.57 peak just a week after it was testing support at $29,500.
Ether was last up 5 percent at $2,304.
Bitcoin remains some $27,000 off its mid-April high of almost $65,000. It has been hurt by criticism of the energy consumed by the computer servers underpinning it, a regulatory crackdown in China and harsher official scrutiny in Europe and the US.