Bitcoin mimics stocks rally, hits two-week high
Smaller cryptocurrencies, which tend to move in tandem with bitcoin, also slumped. PHOTO: REUTERS/FILE
Bitcoin hit its highest in two weeks on Saturday, extending the previous session’s strong gains as cryptocurrencies basked in a recovery in risk appetite and a rally in stock markets.
The world’s largest cryptocurrency hit $41,983, taking gains from Thursday’s lows to nearly 16%, and marking a 27% rise from the year’s low of $32,950.72 on January 24.
Ether, the coin linked to the ethereum blockchain network, scaled the $3,000 level for the first time since January 21.
Friday’s over 11% rise was the biggest single-day gain for bitcoin since mid-June, and the first major bounce after weeks of being roiled, along with technology and growth stocks, following fears of faster-than-expected Fed rate hikes to curb a surge in inflation.
It came alongside a rally in US stocks, with the tech-heavy Nasdaq ending the week with gains despite the heavy volatility from earnings, including Amazon’s robust growth and Facebook owner Meta Platforms’ disappointing results.
Those synchronised moves showed how bitcoin has become far more of a mainstream asset, jolted by swings in risk appetite.
“The current panic and volatility surrounding bitcoin is based on a fundamental misunderstanding of it as an asset class,” said Ed Hindi, Chief Investment Officer of Swiss-based cryptocurrency hedge fund Tyr Capital.
“When valuations on the Nasdaq fall, misguided institutional investors start liquidating bitcoin positions en masse as if it were a tech stock.”
The recovery in stocks boosted other listed crypto assets on Friday.
Published in The Express Tribune, February 6th, 2022.
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