Bitcoin hits two-week high but crypto sentiment remains fragile

[LONDON] Bitcoin extended a tentative rebound on Wednesday (Dec 3), hitting a two-week high as the wider crypto market seeks a sustained recovery from a weeks-long selloff. 

The original cryptocurrency rose as much as 2.5 per cent to about US$93,900, its highest intraday level since Nov 17. Ether and other major tokens also edged higher. 

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 US$126,000. Since then, more than US$1 trillion in crypto market value has been wiped out. 

“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 exchange-traded funds investing in Bitcoin, which recorded what McNulty called a “feeble” US$59 million inflow on Tuesday, according to data compiled by Bloomberg. 

Traders have endured a bumpy ride this week. Token prices tumbled on Monday following comments by Strategy’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 US$1.4 billion reserve to have cash readily available. 

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Bitcoin then regained ground on 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 ETFs and mutual funds that primarily hold cryptocurrencies to be traded on its platform.

The latest rally has led to liquidations of about US$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.” BLOOMBERG