Bitcoin reached a two-year peak on Tuesday, driven by indications that significant players were entering the cryptocurrency market. The world’s most significant digital currency added as much as 4.4% to $56,039, extending a rally that fueled demand for smaller rival ether. According to market data, the rise lifted crypto markets back above $1 trillion.
In the last two sessions, the cryptocurrency has experienced a surge of over 10%, a momentum attributed partly to software firm MicroStrategy Inc. On Monday, MicroStrategy disclosed its recent acquisition of approximately 3,000 bitcoins, with a total expenditure of $155 million. The company now has about $10 billion of virtual tokens, making it the world’s largest Bitcoin holder by market capitalization. MicroStrategy’s purchase stoked investor confidence and sent company shares up about 14%. Other crypto-relate stocks, such as Coinbase Global and ether miner Marathon Digital, rose more than 5%.
Analysts have been anticipating a revival in crypto markets this year, with the Federal Reserve cutting interest rates to try and tame inflation without tipping the economy into recession. But despite the recent gains, many investors remain cautious and are wary of the underlying technology behind these currencies.
Still, there are signs that investors may be ready to move on from recent crypto setbacks. Bitcoin hit fresh multi-year highs, and its market capitalization went back above $1 trillion this week, according to data provider CoinGecko.
But the rise of the most prominent cryptocurrency is unlikely to last, analysts say. One primary reason is that Bitcoin’s price has surged, only to plunge sharply.
Another concern is that many investors need more experience navigating the crypto market. And as a result, they tend to buy and sell at the wrong times. Those moves can leave them susceptible to “flash crashes.”
For now, though, the market is rebounding, and some analysts expect it to keep rising. That could be good news for people with long positions in Bitcoin. But it’s not good for short sellers betting on a price fall.
