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Bitcoin’s the most popular virtual currency surged as much as 18 percent on Wednesday, topping $13,000 for the first time since January 2018, and bringing its gain since late Friday to almost 40 percent.
The digital asset has climbed more than 200 percent since December, prompting many investors to ignore the 74 percent drop last year that followed the unprecedented 1,400 percent surge in 2017.
“While I understand the excitement for the community that a company like Facebook, backed by other big names, has launched its own coin, this just feels a lot like last time and we all know what happened then,” Craig Erlam, senior market analyst at Oanda Corp. in London wrote in a note. “Perhaps this time the drop off won’t be so bad as we are seeing more mainstream adoption but it may be naive to think that it can’t come crashing down again.”
Its relative strength index, a gauge of momentum, is now within the level when the cryptocurrency peaked around $19,500 in 2017.
Accelerating gains have raised the stakes for traders as they try to gauge whether this month’s rally has more staying power than the bubble that ended with a $700 billion crypto wipeout in 2018.
While bulls have cheered signs of growing interest in virtual currencies from major companies like Facebook Inc. and JPMorgan Chase & C0., skeptics say it’s unclear how those initiatives will ultimately benefit Bitcoin and its peers.
A break above the $12,720 level “will allow for a complete retracement of the 2018 bear market,” according to John Kolovos, chief technical strategist at New York-based Macro Risk Advisors, though he noted in comments Tuesday that the rally was “turning more and more impulsive.”
The last time Bitcoin rose above $12,000 was in December 2017. It rallied further, eventually reaching as high as $19,511 later in the month, but the surge was followed by a precipitous fall that saw it drop below $6,000 by February. All in all, in December 2017 and January 2018, Bitcoin spent about six weeks above $12,000.
“Bitcoin is very much in the driver’s seat of the crypto market right now,” wrote Mati Greenspan, senior market analyst at trading platform eToro, in a recent note. “After the prolonged crypto winter that was 2018, this year has seen the crypto market as the best performing asset class of 2019 by far, and that was just Spring.”