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Abu Dhabi, UAESaturday 23 June 2018

Bitcoin rises 10% in bounce back from last week's sell-off 

Cryptocurrency back up above $15,000

A man walks past an electric board showing exchange rates of various cryptocurrencies including Bitcoin at a cryptocurrencies exchange in Seoul, South Korea. Reuters
A man walks past an electric board showing exchange rates of various cryptocurrencies including Bitcoin at a cryptocurrencies exchange in Seoul, South Korea. Reuters

Bitcoin rallied past US$15,000 on Tuesday as traders of the world’s biggest digital currency sought to draw a line under its roller coaster five-day slump.

The tokens rose 10 per cent to $15,116.50 as of 11:26am in London, the biggest gain on a closing basis in more than two weeks and the first in six days. Rival currencies litecoin and ethereum were up 2.9 per cent and 2.1 per cent, respectively, according to data compiled by Bloomberg.

The gains will be a welcome relief for cryto bulls, after bitcoin declined 26 per cent in the five days through Monday in what was seen as a major test for the nascent digital currency industry. The advance suggests that, even as financial authorities issue warnings about the risks of a bubble in the asset class, investor interest remains intact, at least for now.

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“The most important question facing it is whether the recent price correction will prove to be what market participants refer to as ‘healthy’,” Mohammed El-Erian wrote in a Bloomberg View column Tuesday. In other words, one that shakes out “excessive irrational exuberance, provides for the entry of institutional investors, encourages the development of market-deepening products, and widens and balances out the investor base and the product offering,” he said.

Amid bitcoin’s wild price ride, attention is also increasingly turning to rival digital tokens. Since the largest cryptocurrency hit a record $19,511 on Dec. 18, it has actually underperformed peers such as ripple and ethereum.

Bitcoin is the crypto benchmark, but not the best representation of the technology, Mike McGlone, Bloomberg Intelligence analyst, wrote in a column on Sunday. A proper focus for institutional investors is likely the broader market, including “forks” and second-generation — or 2G — offshoots that address bitcoin’s flaws, he said.

When the frenzy subsides, 2Gs should continue to gain on bitcoin, according to McGlone. “Ethereum appears prime to assume benchmark status, though bitcoin forks ripple and litecoin are the primary up-and-coming contenders,” he said.