Bitcoin prices rallied roughly 17% in less than 24 hours, as sustained concerns about economic turmoil helped push investors toward safe-haven assets.
The world’s most prominent digital currency rose to as much as $7,212.73 earlier today, according to CoinDesk data.
At this point, the cryptocurrency had climbed 17.1% since yesterday afternoon, CoinDesk figures show.
When explaining this price rally, analysts mostly pointed to investors’ desire for safe-haven assets.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Americans filed over 6.6 million applications for unemployment insurance during the week ending March 28th, according to figures provided by the U.S. Department of Labor (DOL).
In addition, more than 3.3 million Americans filed claims for unemployment the week before, additional DOL data reveals.
These applications came flooding in as businesses across the nation shuttered their doors amid continued concerns about the novel coronavirus.
“The newly updated jobless claims report in the U.S. helped fuel a sharp Bitcoin price increase,” said John Iadeluca, founder & CEO of multi-strategy fund Banz Capital.
“However, additionally, yesterday marked the official start of the second quarter, a common tax incentive for new or added capital in the alternative investments market,” he stated.
“The release of the jobless claims report also came alongside the report of a near 50% increase in citizens receiving benefits, prompting a migration of investment to what could possibly be deemed ‘safe-haven assets’ due to the data suggesting increasing coronavirus economic fears. This can be further supported by the significant rise in gold & commodity futures in the last 48 hours.”
Marouane Garcon, managing director of crypto-to-crypto derivatives platform Amulet, also weighed in.
“I think that people are seeking cover from what they think is going to happen in the traditional markets,” he stated.
“The headlines are getting scarier by the day so people are trying to figure out where can they go for protection. I don’t know if Bitcoin is the safest place, but many people are willing to try.”
Tim Enneking, managing director of Digital Capital Management, offered a different perspective on the situation.
“QE1, 2, 3 and infinity took place over years and coincided with the launch of Bitcoin,” he noted.
However, this latest round of QE “will be trillions of dollars over a period of months,” said Enneking.
“That has to devalue a currency – except currency value is relative (exchange rates) and if everyone is debasing, the devaluation will not be felt. Except versus something like BTC, which has a finite supply.”
“So, I would explain the current move up – and I predict it will continue – by attributing it to the realization that BTC will (finally) be a safe haven – not from temporary economic downturns (it failed that test miserably), but from currency ‘printing presses.’”
Some market observers took a different tack, attributing bitcoin’s recent gains to technical factors.
“Yesterday, on April 1, the price bounced off $6,157 and continued that momentum today to reach $7,200 after which profit-taking brought it below $7,000 – the resistance we previously identified,” said Joe DiPasquale, CEO of cryptocurrency hedge fund manager BitBull Capital.
Denis Vinokourov, head of research for London-based digital asset firm Bequant, also commented, stating that “today’s surge higher was exacerbated by stops being tripped on the break of the $6,900 to $7,000 range, which sent the price soaring to the $7.3k zone.”
Bitcoin ‘Resilient,’ Says Analyst
“I’m impressed by how resilient Bitcoin has been of late,” said Evan Kuo, CEO and cofounder of digital currency firm Ampleforth.
“It may be the case that enough initial panic selling for Bitcoin has taken place, that folks are momentarily willing to be opportunistic about the asset,” he added.
“Bitcoin is less affected than equities by uncertainties surrounding what constitutes a reasonable valuation with respect to p/e ratios, gdp forecasts, employment, etc.,” noted Kuo.
“All of this supports the case for Bitcoin being an interesting asset to watch after the fear subsides, particularly if we’re faced with a slow macro-recovery.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.
Source: Forbes – Money