Bitcoin extends recent bout of volatility in climb back toward $30,000

Bitcoin pushed back toward $30,000, extending a recent period of notable swings around the closely watched round-number level.

The largest token rose as much as 3.7 per cent on Thursday before paring the advance to trade at $28,750 as of 9:52am in Singapore. Smaller tokens including Ether, Cardano and Avalanche made gains too.

“We’re seeing short positions getting liquidated into a market that exhibits thin order books, pushing up the Bitcoin price,” said Stefan von Haenisch, head of sales trading at OSL SG in Singapore.

Bitcoin surged as much as 7.3 per cent on Wednesday but quickly erased the move and fell into the red.

Some market watchers pegged the rally in the US session to the notion that the token is viewed as a hedge for US banking angst, which flared again around First Republic Bank. The hedge argument is based on the contention that Bitcoin embodies an alternative to the fiat-based banking sector.

The subsequent intraday retreat on Wednesday sparked a litany of speculation. The theories included the suggestion that a well-known trading firm was dumping Bitcoin and that the US government was selling the cryptocurrency. Another claim was that tokens connected to the Mt. Gox collapse may finally be reintroduced into the market.

‘Straddle’ narratives

Bitcoin has rebounded 74 per cent in 2023 from last year’s rout, weathering a US crypto crackdown and the long shadow of the collapse of the FTX exchange.

Expectations that the Federal Reserve will eventually pivot to lowering interest rates have helped to breathe life into digital-asset markets.

But Bitcoin’s jump has sputtered around $30,000, with the token poking above that level only to slip back. It remains $40,000 down from its 2021 record.

Bitcoin “is a risk asset, but it is also more than that,” wrote Noelle Acheson, author of the “Crypto Is Macro Now” newsletter.

“It is also an ‘insurance’ asset, and as such is an intriguing banking strain play: one of the only assets that can straddle both narratives.”

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