Bitcoin briefly tops $40,000 for first time since June as cryptocurrency rallies after sell-off
Article originally posted on CNBC by Arjun Kharpal MON, JUL 26 2021 12:06 AM EDT / MST- Source:
Bitcoin surged above $40,000 for the first time in nearly six weeks on Monday as sentiment turned bullish following a recent sell-off.
The cryptocurrency traded above the key level briefly, reaching $40,245 by 3:30 p.m. ET, according to Coin Metrics data. Bitcoin last traded above the $40,000 level on June 16.
Bitcoin’s price retreated later Monday after Amazon denied City A.M.’s report that the retail giant would start accepting bitcoin for payments this year.
Amazon on Friday confirmed it is looking to add a digital currency and blockchain expert to its payments team, suggesting it could be taking a closer look at bitcoin and other cryptocurrencies.
“Notwithstanding our interest in the space, the speculation that has ensued around our specific plans for cryptocurrencies is not true. We remain focused on exploring what this could look like for customers shopping on Amazon,” an Amazon spokesperson said in a statement to CNBC.
Bitcoin traded at about $38,024, or about 10.4% higher, by 4:45 p.m. ET .
The moves in the cryptocurrency’s price comes after bitcoin recently fell below $30,000 after a global sell-off in stocks, sparking fears that it could plunge even further.
Musk, Dorsey, Wood in focus
Twitter CEO Jack Dorsey, Tesla CEO Elon Musk and ARK Invest CEO Cathie Wood all recently spoke during a closely watched bitcoin conference called “The B-Word.”
Musk said that Tesla would likely start accepting bitcoin for vehicle purchases again as a greater share of bitcoin mining switches to renewable energy. In May, Tesla suspended vehicle purchases using the cryptocurrency out of concern over the “rapidly increasing use of fossil fuels for bitcoin mining.”
Bitcoin mining is the energy-intensive process of creating new coins, which involves solving complex math problems. The computational power required to do so also consumes a lot of energy.
“The Chinese trading day has opened up, and the Elon/Jack/Cathie talk was super bullish,” said Alex Brammer of Luxor Mining, a cryptocurrency pool built for advanced miners.
These bullish moves have also contributed to a so-called “short squeeze,” according to bitcoin mining engineer Brandon Arvanaghi.
Investors who short bitcoin are betting that the price will fall further. But if the price goes higher, these investors look to cut losses and exit their short positions, which helps to push the price even higher.
“I think the extent of the jump was probably driven by over-leverage shorts,” Vijay Ayyar, head of business development at cryptocurrency exchange Luno, said.
Meanwhile, some of the issues that have weighed on bitcoin’s price have begun to clear up. Over the past few months, China has renewed its crackdown on cryptocurrencies targeting mining and trading. And concerns over the carbon footprint of bitcoin mining are starting to wane.
Luxor Mining’s Brammer said the uncertainty around the environmental impact of mining and the Chinese regulatory concerns have “worn off.”