The cryptocurrency is recovering strongly after a weekend meltdown, with bitcoin is back above the $8,000 mark in early trading on Monday. On Sunday, the price briefly dropped to almost 1.5-month low of $7,247.50 but encountered dip buyers and recouped losses quickly.
The recent plunge was attributed to report that Twitter Inc. was going to ban cryptocurrency ads in the coming weeks, similar to Google’s decision last week and Facebook’s step in January. However, the company itself has not confirmed the decision yet, and the market participant decidednot to overreact to unconfirmed rumors. Aside from technical factors, the trigger for a spectacular rebound was the Financial Stability Board (FSB) president Mark Carney’s letter to finance ministers where he noted that “currently, these crypto-assets do not pose a risk to global financial security”.
This unexpectedly soft rhetoric by Carney gas somewhat decreased market concerns over today’s G20 meeting, where digital currencies regulation will be on the agenda. Though there is a risk of some aggressive statements and comments from European ministers in the over the coming two days, the downside potential for bitcoin will likely be limited, and “buy the dips” strategy will remain attractive for traders. So, in case of another sell-off, BTCUSD could attract buyers around the $7,000 mark. Anyway, the volatility may be higher in coming days, which requires caution from traders.
By Helen Rush
Senior Analyst at Capital Markets