Bitcoin extends recent bout of volatility as it rallies towards $30,000

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(Bloomberg) – Bitcoin retreated towards $30,000, extending a recent period of notable swings around the closely watched round number level.

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The largest token rose 3.7% on Thursday before narrowing the lead to trade at $28,750 as of 9:52 a.m. Singapore. Smaller tokens including Ether, Cardano, and Avalanche also made gains.

We were seeing short positions being liquidated in a market that is showing thin order books, driving up the price of Bitcoin, said Stefan von Haenisch, head of sales at OSL SG Pte in Singapore.

Bitcoin surged 7.3% on Wednesday, but quickly erased the move and fell into the red, leaving investors scratching their heads as is often the case with crypto price swings.

Some market watchers have linked the rally in the US session to the idea that the token is seen as a hedge against US banking angst, which has again erupted around First Republic Bank. The hedging argument is based on the claim that Bitcoin embodies an alternative to fiat-based banking.

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

Stories on horseback

Bitcoin has rebounded 74% in 2023 from last year’s rout, weathering a US crypto crackdown and the long shadow of the FTX exchange meltdown. Expectations that the Federal Reserve will eventually move towards lower interest rates have helped bring digital asset markets to life.

The story continues

But Bitcoins jump exploded around $30,000 as the token broke above that level only to then pull back. It remains $40,000 shy of its 2021 record.

Bitcoin is a risky asset, but it’s also more than that, wrote Noelle Acheson, author of the Crypto Is Macro Now newsletter. It’s also an insurance asset, and as such it’s an intriguing game of banking tension: one of the only assets that can straddle the two narratives.

Read more: Bitcoin Halving Spurs Predicting the Rally Beyond $50,000 by 2024

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