What Caused the Bitcoin ReBound
Bitcoin notched a fresh all-time high Wednesday as investors cheered the successful launch of the first U.S. bitcoin futures exchange-traded fund.
The world’s largest cryptocurrency climbed 3.9% to $66,398.25 by 4 p.m. ET, according to Coin Metrics. The coin at its highs passed the $66,900 level Wednesday, topping a previous intraday record of $64,899 set in mid-April.
“The key here is whether we are able to establish support above $65,000,” said Jesse Proudman, CEO of crypto robo-advisor Makara. “If we can, the classic Q4 crypto rallies we’ve seen in most years could take bitcoin towards some of the loftier price predictions we’ve seen over the past several months. If sell pressure takes over, though, our next leg up could take a while to materialize.”
Bullish comments from a legendary trader boosted sentiment Wednesday. Billionaire investor Paul Tudor Jones called crypto his preferred inflation hedge over gold.
“Bitcoin would be a great hedge. Crypto would be a great hedge,” Jones told CNBC’s “Squawk Box.” “There’s a plan in place for crypto and clearly it’s winning the race against gold at the moment … I would think that would also be a very good inflation hedge. It would be my preferred one over gold at the moment.”Ethereum also rose 7.4% to cross back over the $4,000 level. The world’s second-largest cryptocurrency traded at $4,104.61 approaching its all-time intraday high of 4,380 in May.
Not everyone in the crypto market was impressed. Several bitcoin investors want an ETF that tracks spot prices rather than futures.
Novice investors have had to get to grips with terms like “contango,” where the futures price of a commodity is higher than its spot price, and “backwardation,” which is the opposite.“More products are great, but I just don’t see the point of investing in futures-based bitcoin ETFs when you can buy the asset in the spot market,” said Jodie Gunzberg, managing director of CoinDesk Indexes.
“It’s not like oil or cattle that is impossible to hold physically for most investors. It’s more like gold that can be easily held. Except the cost is more like oil,” she added.
Still, it’s a landmark for the nascent crypto industry, which has long been pushing for greater acceptance of bitcoin and other digital currencies on Wall Street.