A visual representation of bitcoin.
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Bitcoin rose back above the $50,000 mark on Tuesday after plunging in September from the same level on fears about regulation in the U.S. and China.
Bitcoin rose as high as about $50,400 on Tuesday, topping a key psychological resistance level for traders. It last traded 2% higher to $50,339.18. It’s currently up 14% so far for the month of October and has gained 72% on a year-to-date basis.
The last time bitcoin broke $50,000 was at the start of September, when the cryptocurrency became legal tender in El Salvador. Cryptocurrencies have been rallying since Friday as investors bet on a fourth-quarter run. Bitcoin spent much of the third quarter hovering in the low $30,000 range as investors worried about regulatory policies in China and the U.S., though it had a strong finish.
Teddy Vallee, chief investment officer at Pervalle Global Capital, said he expects momentum to continue through the quarter if a big equity correction doesn’t get in the way of it.
“Long term holders now make up more than 80.5% of total supply, which has historically led to large rallies over the ensuing six months,” he said. “Absent of a large equity correction, we see prices higher from here by year end. Incremental demand should remain strong, as institutional adoption continues to accelerate, which creates a favorable supply/demand dynamic.”
The rally comes on the heels of comments made last week by Federal Reserve chairman Jerome Powell, who said in a House Committee on Financial Services hearing that he has “no intention to ban” cryptocurrencies in the U.S. the way China repeatedly has.
There’s been bullish commentary from Wall Street supporting the comeback. Bank of America called the digital assets sector “too large to ignore.”
“Bitcoin is up over 2x its 2017 high at ~$47,000, as adoption by individuals increased, corporate managements begin due diligence and regulators work to provide a framework that could bring digital assets into the mainstream,” it said. “Bitcoin remains the most valuable digital asset at an aggregate value of $887 billion. Value drivers include supply/demand dynamics, scarcity (only 21 million coins total; ~19 million already mined) and potential ETF approval timing.”