Bitcoin Price Eyes $600 as Trader Optimism Returns
Bitcoin prices recently neared $600, showing their resiliency after falling to lows of $480 in the aftermath of the Bitfinex hack.
:format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/RKNWCHJV2NGHFB423XJWXJX4NE.jpg)
:format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/MKP4JV4NDVAV5K5JXCFXUR3U3I.jpg)
The price of bitcoin has begun to test $600 following a high-profile exchange hack that left a wake of uncertainty for traders last week.
reached a high of $598.64 this weekend, but since then have largely traded tightly in the $560 to $580 range, CoinDesk USD Bitcoin Price Index (BPI) figures reveal.
These figures were much improved over the low of $480 observed last week and come amid new transparency from Bitfinex, the troubled exchange that lost 120,000 BTC (worth more than $60m) in a theft that has to date attracted ample mainstream media attention.
For traders, however, it's the potential recovery from the subsequent 20% decline that is starting to become the biggest topic of interest.
Analysts were quick to compare last week's drop to one observed earlier this year when high-profile Bitcoin Core developer Mike Hearn exited the project, prompting sharp losses in the digital currency's price.
Tim Enneking, chairman of cryptocurrency investment manager EAM, was keen to highlight that the Bitfinex hack in and of itself did nothing to change bitcoin's perceived value among traders, even if general public perception could be impacted.
Rather, he expects traders to see this as an opportunity.
Enneking told CoinDesk:
Mean Reversion
Petar Zivkovski, director of operations for bitcoin trading platform Whaleclub, described bitcoin’s price recovery as a mean reversion, stating that the price declined "too quickly" following the hack.
To Zivkovski, the decline was primarily caused not by traders who had given up on bitcoin's value, but on margin calls for long positions held by those who were "surprised by the hack and did not have much reaction time".
Because the Bitfinex hack helped trigger fear and uncertainty, the BTC/USD pair plunged below $500, Zivkovski said.
He emphasized that the pair recovered nicely from its lows below $500, a sign that speaks to market confidence.
Enneking further spoke to how bullish wagers helped cause this rise, noting that "we have been strongly leveraged long since the low $500s".
This robust sentiment coincided with bitcoin’s rise from their post-hack low of $480 on 2nd August to more than $580 on 4th August.
Bitfinex response
While Zivkovski and Enneking spoke largely to market sentiment, Arthur Hayes, CEO of bitcoin leverage trading platform BitMEX, said that Bitfinex’s response has played a role in buttressing bitcoin prices.
"It seems that Bitfinex will not choose the bankruptcy route which would have been very price negative," he explained.
Hayes also spoke to how Bitfinex's expected reopening will likely help provide support for bitcoin prices.
"Bitfinex is expected to reopen in the coming days, once they allow trading many traders will attempt to purchase bitcoin with any dollars they have on the platform and withdraw," he stated, adding:
Zivkovski emphasized that market observers should get greater clarity on the effects of the exchange’s hack soon enough.
He concluded:
Dollar bill on hook image via Shutterstock
DISCLOSURE
Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.