Bitcoin surged nearly $ 40,000 as a spate of short coverings fueled a rally apparently sparked by speculation about Amazon.com Inc.’s involvement in the crypto industry.
A job posting from the retail giant looking for an executive to develop the company’s “digital currency and blockchain strategy” sparked the question among analysts whether the move could ultimately lead to Amazon accepting Bitcoin as a means of payment.
As the largest digital token won by the speculation, investors rushing to cover bearish bets fueled the rally, with the coin rising as much as 15 percent to $ 39,681 on Monday. According to data from Bybt.com, more than $ 950 million in crypto shorts were liquidated on Monday, most since May 19.
“The extent of the jump was likely being driven by leveraged shorts that were too high,” said Vijay Ayyar, head of Asia Pacific at the Luno crypto exchange in Singapore, while the rumors about Amazon likely played a role as well.
Bitcoin rose 11 percent to $ 38,413 at 10:10 a.m. in New York, which detracted from some of its profits after Bloomberg News reported that a U.S. investigation by Tether targeted whether executives behind the token were guilty of bank fraud . Ether soared ahead of an upgrade due August 4th that will reduce the number of tokens outstanding by destroying some of them every time it is used to boost transactions on the world’s most widely used blockchain.
“The mood music has certainly changed in the last week,” said Antoni Trenchev, managing partner and co-founder of Nexo, a crypto lender. “Has the tide now turned?”
Monday’s surge has brought the crypto markets back to life after being stuck in the doldrums for months. On Binance, the largest crypto exchange, perpetual Bitcoin contracts in early New York trading rose as much as 30 percent over an hour, a sign of extreme volatility in one of the coin’s most liquid derivatives.
Bitcoin has seen less volatility since mid-May and the enthusiasm for crypto has somewhat faded amid regulatory action in China and criticism of its environmental impact.
“It’s exciting to see Bitcoin rebound 10 percent overnight and it’s clear that general market sentiment has improved spectacularly over the past few days,” said Loukas Lagoudis, executive director of digital assets hedge fund ARK36. “However, investors should proceed with caution and avoid over-negotiating, as liquidity is still relatively low before the Christmas season.”
Some technical signals suggest that the coin is moving too far too quickly. Although Monday’s price spike pushed Bitcoin above its 50-day moving average, the coin failed to break the key $ 40,000 mark during the rebound. It also broke the upper trading band of its trading envelope – an indicator that smooths moving averages to reflect higher and lower boundaries – which signals a revision of the mean. For many, the next big hurdle will be the 100-day moving average of around $ 40,700, followed by the 200-day moving average.
For Trenchev, recapturing Bitcoin’s 20- and 50-day moving averages is a healthy start. “I would now like to see BTC close above $ 40,000 and then above its 200-day average – which is just under $ 45,000 – before we can really relax again,” he said.
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