Bitcoin rallied to a two-week high as a risk-on sentiment returned following selloffs in more speculative corners of the financial market.
The digital asset rose as much as 5.7% before trimming some gains to trade at $53,747 as of 1:02 p.m. in New York. Ether — the world’s second largest cryptocurrency — jumped as much as 3.8%. The gains mirror broader risk-on optimism, with the Nasdaq 100 Index recovering from a decline Monday that pushed the tech index to a so-called correction level.
“We feel that it is more of a ‘risk-on/risk-off’ play,” Matt Maley, chief market strategist at Miller Tabak + Co. said in a note Tuesday.
Maley did note, however, that the world’s largest cryptocurrency held up “quite well” throughout the recent Nasdaq correction, adding that this could “have been due to the fact that the S&P 500 had also held-up quite well.”
Even as high-flying bets like Tesla Inc. and the ARK Innovation ETF have cratered recently, Bitcoin prices have been buoyed by news of more institutional adoption, fueling crypto proponent’s argument that big financial players are rushing to gain exposure to the token, while another viewpoint stands that the digital asset is a stimulus-fueled bubble destined to burst like its 2017-2018 boom and bust cycle.
Mark Mobius, founder of Mobius Capital Partners made a little-discussed connection between tech stocks and the world’s largest digital asset on Bloomberg Television Tuesday.
“The relationship between Bitcoin prices and the tech market is very close,” he said. If “Bitcoin prices go down, I think the tech stocks are going to be hit very badly.”
Meanwhile, the digital-asset industry continues to see endorsements from institutions. On Monday, NYDIG, a provider of Bitcoin-related financial services, announced that it raised $200 million from investors including Stone Ridge Holdings Group, Morgan Stanley, New York Life, MassMutual and Soros Fund Management.
NYDIG said Bitcoin adoption among institutions is accelerating, citing data that insurers have more than $1 billion in Bitcoin-related exposure on its platform. Technical analysis is also supportive of higher prices, according to a report by Evercore ISI strategist Rich Ross, who said Bitcoin could reach $75,000.
“Bitcoin and Ethereum bullishness are back as more big-money bets keep flowing into cryptocurrencies,” Edward Moya, senior market analyst at Oanda, wrote in an email. “Institutional interest still seems strong.”