- Selloff in Bitcoin reverses course on buying by Square and MicroStrategy as well as comments by U.S. Federal Reserve Chairman Jerome Powell that the central bank will maintain its accommodative policy for the foreseeable future
- Bitcoin traded below US$50,000 for the most part before staging a sharp recovery on the news and is now trading just over that level
Just when you thought it was safe to declare the demise of Bitcoin, those allegedly responsible for its most recent rally have returned to the market to support their favorite cryptocurrency.
Bitcoin rebounded from its sharp selloff this week as longtime buyers of Bitcoin, MicroStrategy and Square announced fresh purchases in the benchmark cryptocurrency.
Payment services firm Square announced that it had bought a further US$170 million of Bitcoin, raising its holdings to about 5% of the company’s cash and equivalents, while MicroStrategy revealed that it had paid an average US$52,765 for nearly 20,000 Bitcoins last week after issuing US$1.05 billion in convertible bonds for that purpose.
MicroStrategy’s original Bitcoin-buying convertible bond issuance was pegged at US$400 million and the overshoot shows that many still see MicroStrategy as a conduit to participation in Bitcoin’s fortunes.
Comments by U.S. Federal Reserve Chairman Jerome Powell, who on Tuesday signaled that the central bank was nowhere close to unwinding its loose monetary policy, also fueled bullish sentiment in Bitcoin.
Cryptocurrencies continue to remain controversial.
Moving beyond an interesting dinner table topic, Bitcoin and its ilk has the investing public divided, with some viewing the nascent asset class as being increasingly embraced by long-term investors, instead of just speculators, and others fearing that the cryptocurrency is in the midst of a massive bubble that will eventually have to burst.
What there seems to be little debate on though, is that Bitcoin is likely to continue being volatile for some time.
Regulators are however keeping a keen eye on the digital asset class, with many central banks and authorities warning the investing public that they could lose some or all of their money in cryptocurrencies, as more retail investors catch on to cryptocurrencies.
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