The bitcoin price might be down, but don’t ever count it out.
After sinking as low as $9,049 on July 17 during a vicious plunge, the dominant cryptocurrency flexed its muscles on Thursday to mount a recovery back across the $10,000 line.
The swift rebound saw bitcoin surge nearly $1,000 in less than 30 minutes, rising from $9,280 to $10,200 on cryptocurrency exchange Bitstamp, reversing a significant portion of its recent plunge.
Analysts have almost universally blamed that sell-off on the US government’s increased focus on cryptocurrency regulation following Facebook’s announcement that it would launch a blockchain called Libra.
EToro Senior Market Analyst Mati Greenspan noted that Tuesday’s downward spiral began following the first leg of Facebook executive David Marcus’ Capitol Hill inquisition.
The severe downturn thrust BTC below the psychologically-significant $10,000 mark and triggered a deluge of bearish forecasts.
It also erased the mini-rally that followed Facebook’s formal Libra unveiling on June 18.
Bulls had speculated that Libra would be bullish for bitcoin adoption. Now, they’re worried that Libra will trigger a federal government crackdown on crypto.
One chief concern in the industry is that Congress or financial regulators will bar Wall Street from engaging with cryptocurrency more directly, such as through the launch of a bitcoin ETF.
Another is that the negative press coverage will dissuade institutional investors from dipping their toes into the crypto space. Largely absent from bitcoin’s previous bull runs, many analysts credit these sophisticated buyers with spearheading the asset’s current ascent.
The million-dollar question is whether legislators and regulators will lump decentralized cryptocurrencies like bitcoin in with centrally-managed assets like Libra.
President Trump, for instance, criticized them both in the same tweetstorm.
Others, like House Minority Leader Kevin McCarthy and Rep. Patrick McHenry, have rushed to the defense of bitcoin despite lobbing criticism at Libra.
Still, the market isn’t handling the uncertainty well.
The “Crypto Fear & Greed Index,” which measures investor sentiment, currently flashes an “Extreme Fear” reading. That’s a staggering shift from last month, when it broached “Extreme Greed” territory.
Bitcoin currently trades more than 35% below the yearly high it set less than a month ago. However, it continues to cling to year-to-date gains of around 150%.
Bitcoin dominance, which measures BTC’s share of the global crypto market, stands close to a two-year high near 66%.
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Last modified: May 20, 2020 12:14 AM UTC