Bitcoin Rises Above $19,000 After Biggest Rout since Pandemic

Bitcoin has recovered all of its losses from the biggest rout since March, showing resilience in a cryptocurrency rally that has outperformed most major asset classes in 2020.

The most traded digital coin rose over the weekend and added nearly 5% more on Monday to $19,109. This broke its closing high reached last week, before prices started to fall. A Bloomberg gauge of the biggest cryptocurrencies is up 13% from Friday.

The Bitcoin correction didn’t last long, according to Craig Erlam, senior market analyst at Oanda, who said the token could be on the verge of hitting a new high. Entering “uncharted territory and the psychological boost that would come from a move like this could aggressively propel Bitcoin higher.” He is targeting $20,000 in the short term.

Bitcoin’s volatility was visible last week, when it collapsed by more than $3,000 in just two days. The fall triggered massive spot and futures trading volume and drew special attention as it started just hours after the currency failed to set a new intraday high. JPMorgan Chase & Co. strategists said that while the recent fall has erased some speculative “foam”, further declines are possible.

The futures market proves that it is becoming a bigger risk hedging place for Bitcoin. Open interest on the CME Group platform reached an average of 8,300 contracts in 2020 compared to 4,000 last year.

Recovering large losses is not unusual for Bitcoin. The last time it plunged 10% in one day, on May 10, it only took four days to recover.

Bitcoin’s over 150% rally this year coincides with a steady flow of institutional investment in the coin and crypto infrastructure, from trading systems to custody. The latest was from Guggenheim Partners LLC, which said in a filing Friday that it could invest up to 10% of its $5.3 billion Macro Opportunities Fund in a Bitcoin trust.