Bitcoin surged, climbing in minutes to its largest daily gain since July. Other digital currencies also rose in shock rallies that followed the biggest monthly drop since May.
Before paring gains, the largest cryptocurrency in terms of market value rose by 10% to $47.884 in New York trading early. EOS, Litecoin, and Ethereum all saw a jump, with the Bloomberg Galaxy Crypto Index increasing as high as 8.9%. Concern about rising regulatory pressures in China and the U.S. had caused Bitcoin to plummet 7.6% in September.
While traders offered many possible explanations for the gains they pointed out that digital assets are vulnerable to price swings due to the fractionalized market making them more volatile than the rest. Some traders cited Thursday’s remarks by Jerome Powell, Federal Reserve Chair, that the central bank had “no intention” to ban cryptocurrency. Others cited price levels like moving averages which are closely monitored by technical analysts.
“Markets have been trading sideways over a lack regulatory clarity and statements by U.S. authorities indicating that they were seeking significantly to curtail crypto activity,” stated Leah Wald (chief executive at Valkyrie Investments, crypto asset manager). This, along with the weakness in the stock markets and October being a traditionally bullish month for crypto markets, could indicate a shift towards risk-on trading within crypto markets over the next few weeks as investors seek returns from non-traditional assets.
As Bitcoin surged, crypto-related stocks like Marathon Digital Holdings Inc., Riot Blockchain Inc., and Bit Digital Inc. also gained Friday.
In a Thursday hearing before Congress, Powell stated that he has no intention to ban cryptocurrency. Powell did however mention that regulation of stablecoins may be necessary.
Stuart Alderoty (general counsel at Ripple Labs) tweeted that a press release claiming the company had settled a lawsuit against the U.S. Securities and Exchange Commission, was false. The XRP token, which is the subject of the lawsuit, jumped up to 13% before paring losses.
Although Bitcoin fell in September, it posted a 25% gain for the third quarter. This compares to a 41% drop in the previous three months.
Charts were used by technicians to find clues about where Bitcoin might go next. Antoni Trenchev (Managing Partner and Co-Founder of Nexo, a Crypto lender) said that he was encouraged by the quick move that took Bitcoin over its 20-50 and 200-day moving averages in a single pass.
Earlier: Bitcoin rises as technicians investigate whether rally is sustainable
The MACD gauge, or moving average convergence divergence, has also turned positive, which confirms the upward shift in sentiment.
Trenchev said, however, that ‘be careful, sudden accelerating prices can hastily unwind.