Bitcoin Trades at $40K as Rebound Rally Stalls
Bitcoin had risen to nearly $43,000 earlier Thursday.
May 20, 2021 at 7:11 p.m. UTC
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Bitcoin (BTC) was hovering around $40,000 after losing some of the gains from a forceful rebound earlier Thursday.
The largest cryptocurrency by market capitalization at one point surged as high as $43,000, regaining almost all of the ground lost during Wednesday's 14% price plunge, which was the biggest single-day decline in 14 months.
Shortly after 16:00 coordinated universal time (12 p.m. ET), bitcoin dropped about 5%. That move roughly coincided with the publication of a U.S. Treasury report calling for businesses that receive transfers of more than $10,000 in cryptocurrencies to report them to the Internal Revenue Service.
“There are definitely still some downside risks left short term, and markets rarely rebound in one single move up,” said Jean-Marc Bonnefous, managing partner of investment firm Tellurian Capital. “Political noise, with news of tax rules tightening, is still weighing on a prompt recovery.”
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- Matt Blom, head of sales and trading for the digital-asset firm Equos, wrote in his daily newsletter that a move back above $42,800 "will FOMO those on the sidelines back into BTC."
- "Resistance at $44,000 will be the first blocker on thoughts of bitcoin returning to trade with a $50,000 handle," according to Blom. "Should we reach $38,800, and should bulls fail to protect it, then $33,800 awaits. Any move down will likely see more drama as fear once again returns to the market."
- "Short-term price movements are difficult to predict, but thus far we are encouraged by the resiliency in price," Greg Cipolaro, head of research for the bitcoin-focused asset manager NYDIG, wrote Thursday in an email. "Only in hindsight will we know for certain whether the recent events were a mid-cycle correction or part of a larger cyclical risk-off move."
Bitcoin's rebound came as U.S. stocks rallied on positive economic news, while the yield on 10-year U.S. Treasury bonds declined by four basis points, or 0.04 percentage point, to 1.63%.
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