Bitcoin is trying to make a comeback. It was close to $US50,000 (A68,000) for its first time since May. The wider cryptocurrency market, however, also tried to recover massive losses.
Bitcoin is the most widely traded cryptocurrency and trades at $A44,000. This comes after the top 10 cryptos (ethereum, dogecoin and dogecoin) added $US300 billion ($A409 trillion) to the market in the past week.
Tony Sycamore from City Index is the APAC market analyst. He said that the bitcoin rally follows last week’s ethereum upgrade. Investors can now buy bitcoin without having to go through the tedious trading process.
He noted that this was overshadowing the concern that the US might be about to adopt legislation including cryptocurrency in tax reporting legislation under the Infrastructure and Jobs Act.
“If bitcoin sees a sustained rise above the $45,000 200-day moving average, it would be a confirmation of a break from the top three months and further gains to $52,000.
Investors and crypto experts fear that US regulations will make it impossible to mine cryptocurrency. They have called it a “backdoor ban” and Coinbase chief executive Brian Armstrong described the bill as “disastrous”.
Elon Musk, a billionaire, has also joined the discussion to argue that there is no crisis that warrants ‘hasty legislation.
Meanwhile, ethereum experienced a strong rally last week with gains as much as 30 per cent as it underwent a major software upgrade on Thursday.
To stabilize transaction fees and decrease the supply of ether tokens, the digital coin was upgraded. This will increase the price of ethereum because there will be less supply than demand.
Gemini’s Asia-Pacific Managing director, Jeremy Ng, stated that crypto enthusiasts in Australia are using bitcoin and other digital coins to combat inflation.
He stated that while investors may be nervous about bitcoin’s volatility, this is normal for an asset class that is relatively new.
“Bitcoin’s maturing process is continuing, but it is also growing exponentially. He said that Bitcoin has been the most popular asset class to have had the highest average return over all asset classes for the past decade.
“Bitcoin’s annualized return rate is more than 200 percent, which is more than 10 times the average of Nasdaq 100 index, which was second in asset class rankings.”
Regulators around the globe are now increasingly concerned about cryptocurrency and the potential risks it could pose for people’s finances.
The UK’s financial regulator warned people that they could lose all of their money if cryptocurrency is invested in. Recently, Binance was banned by the UK.