Bitcoin climbs back above $50,000 as it starts October on a tear

FAN Editor

A visual representation of bitcoin.

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Bitcoin rose back above the $50,000 mark on Tuesday after plunging in September from the same level on fears about regulation in the U.S. and China.

Bitcoin rose as high as about $50,400 on Tuesday, topping a key psychological resistance level for traders. It last traded 2% higher to $50,339.18. It’s currently up 14% so far for the month of October and has gained 72% on a year-to-date basis.

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The last time bitcoin broke $50,000 was at the start of September, when the cryptocurrency became legal tender in El Salvador. Cryptocurrencies have been rallying since Friday as investors bet on a fourth-quarter run. Bitcoin spent much of the third quarter hovering in the low $30,000 range as investors worried about regulatory policies in China and the U.S., though it had a strong finish.

Teddy Vallee, chief investment officer at Pervalle Global Capital, said he expects momentum to continue through the quarter if a big equity correction doesn’t get in the way of it.

“Long term holders now make up more than 80.5% of total supply, which has historically led to large rallies over the ensuing six months,” he said. “Absent of a large equity correction, we see prices higher from here by year end. Incremental demand should remain strong, as institutional adoption continues to accelerate, which creates a favorable supply/demand dynamic.”

The rally comes on the heels of comments made last week by Federal Reserve chairman Jerome Powell, who said in a House Committee on Financial Services hearing that he has “no intention to ban” cryptocurrencies in the U.S. the way China repeatedly has.

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There’s been bullish commentary from Wall Street supporting the comeback. Bank of America called the digital assets sector “too large to ignore.”

“Bitcoin is up over 2x its 2017 high at ~$47,000, as adoption by individuals increased, corporate managements begin due diligence and regulators work to provide a framework that could bring digital assets into the mainstream,” it said. “Bitcoin remains the most valuable digital asset at an aggregate value of $887 billion. Value drivers include supply/demand dynamics, scarcity (only 21 million coins total; ~19 million already mined) and potential ETF approval timing.”

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