‘Off to the races’: Bitcoin is wrapping up its best week of the year with a 23% gain over the past five days
Bitcoin HODLers are seeing some light in the bear-market tunnel.
While it remains to be seen whether it’s the end of this year’s slump, the 23 per cent gain over the last five days has them cheering. The largest cryptocurrency is heading for its biggest weekly advance since just before it peaked at almost US$20,000 in December. Other large cryptocurrencies such as Ether, Ripple, Bitcoin Cash and Litecoin are up at least 6 per cent Friday.
Bitcoin is inching back up after it slumped 52 per cent in the first quarter, its worst start of a year ever. The approaching deadline to report taxes in the U.S., which means investors are done selling crypto to pay off outstanding balances, and a squeeze against a record short position on Bitcoin are adding to the rally, said John Spallanzani, a portfolio manager at Miller Value Partners.
Regulatory concerns as authorities from China to the U.S. tightened their grasp in the industry have weighed on prices, while social media giants like Facebook Inc. and Twitter Inc. banned advertisements on digital coin sales. There was also speculation that the trustee of failed exchange Mt. Gox was selling its bitcoin to pay back creditors.
“News flow had turned less negative on balance, most of the tax selling had finished and there was a sizable short position that had been accumulated so a few large players took note and once we broke above technical resistance it was off to the races,” Spallanzani said.
Cryptocurrencies may also be gaining as larger investors enter the market, hedge fund Pantera Capital Management said in a note to investors Thursday, where they also called a bottom to the current bear market and recommended investors buy Bitcoin. George Soros, the billionaire investor who called cryptocurrencies a bubble in January, was said last week to have authorized his US$26 billion family office to trade digital assets.
Fundstrat Global Advisors’s Tom Lee says the recent lows levels mirror the 2013 to 2015 trough.
“The risk/reward for BTC is still asymmetrically positive,” Lee said in a note Friday. “As we discussed recently, we think capital gains related tax selling played a factor in the recent weakness (not the only crypto to fiat outflow driver, Mt Gox is another) and these pressures should be alleviating soon.”