Bitcoin hovers around $32,000 after boost from Musk

Bitcoin steadied around $32,000 after a rebound stoked by comments from Elon Musk, Jack Dorsey and Cathie Wood on the future of the largest cryptocurrency.

The digital asset traded at $31,878 as of 6:36 am in New York on Thursday after jumping 6.5 per cent a day earlier. Other cryptos, including Ether and Dogecoin, held onto gains, as did the Bloomberg Galaxy Crypto Index.

Tesla already owns Bitcoin but CEO Musk revealed at a conference that his space exploration company SpaceX also does. He added he’d like to see the token succeed and that he personally has bought Bitcoin, Ethereum and Dogecoin. Ark Investment Management LLC’s Wood said corporations should consider adding Bitcoin to their balance sheets, while Dorsey described it as resilient.

There’s been “good flow” into crypto but “one day of gains does not make a trend” and more work is needed to get the “FOMO crowd excited,” Chris Weston, head of research with Pepperstone Financial Pty, wrote in a note.

Some $1.3 trillion has been wiped off the market value of cryptocurrencies since mid-May. Bitcoin has faced a range of obstacles, including stepped up regulatory scrutiny in China, Europe and the US and concerns about the energy needed by the computers underpinning it. Investors have also generally become more cautious about speculative assets.

Billionaire Musk said Bitcoin mining is “shifting towards renewable energy” and his company will likely resume accepting it as payment for electric cars.

The token has bounced back after sliding below $30,000 earlier in the week, a round number viewed as a key line of support by technical analysts. The latest bounce reflects the third time since late 2019 that Bitcoin has found support at its 55-week moving average.

Cautious sentiment
“The fear in the market was that if Bitcoin breaks below the $30,000 mark, the price will move lower violently,” said Naeem Aslam, chief market analyst with Ava Trade Ltd. “In reality, that is not what we have seen. The Bitcoin price has been stable, and we have not seen any panic selling.”

Scott Minerd, chairman and chief investment officer of Guggenheim Investments, said Bitcoin could yet fall toward $15,000. Steen Jakobsen, chief investment officer at Saxo Bank, said a sustainable break above $32,000 is needed for Bitcoin “to dig itself out of a hole.”

Bitcoin’s advance this year has shrunk to about 10 per cent following a slide from an April record of almost $65,000. That compares with a 16 per cent jump in the S&P 500 Index in 2021.

Proponents argue the virtual currency offers an inflation hedge and will win wider institutional acceptance. Such narratives were always controversial and remain in question, though Bitcoin’s most ardent fans continue to predict big long-term returns.