Bitcoin rose 5% on Wednesday to just above $50,000, and traders are speculating whether the move represents a resumption of this year’s powerful bull market or simply a rebound following last week’s steep plunge to around $43,000.
The largest cryptocurrency is now up 10% so far in March, and a gain this month would mark the sixth straight monthly increase, the first time that’s happened in seven years.
As of 21:00 UTC (4 p.m. ET), bitcoin was changing hands just above $51,000 on Coinbase. The largest cryptocurrency is still well off its all-time-high price above $58,000 reached late last month.
“A week is a long time in crypto: A $43,000 print and the retracement seen last week may as well have happened 6 months ago,” Matt Blom, head of sales and trading for the digital-asset exchange firm EQUOS, wrote on Wednesday. “If the market can hold above support at $47,850, then a continued push at higher prices is the likely outcome.”
Market analyst Joseph Young tweeted the latest breach of $50,000 has come with signs the market is rejuvenated, with derivative-funding costs returning to normal from last week’s elevated levels, few signs of overcrowding in the futures market and blockchain data showing that institutional investors are preparing to hold for the long term.
In other words, the market now appears to have fully reset after last week’s comedown, which might make a fresh rally more sustainable.
Ether (ETH), the second-largest cryptocurrency by market capitalization, rose along with bitcoin on Wednesday. It reached around $1,650, climbing 7% in 24 hours as of 21:00 UTC (4:00 p.m. ET).
One potentially troubling sign: Despite the asset’s strong performance to start the month, shareholders of Grayscale’s ether trust don’t appear so bullish. The difference between the price of ether, as implied in prices for the Grayscale vehicle, and spot cryptocurrency prices turned negative on Tuesday after briefly flipping positive earlier this week.
According to data from Skew, the Grayscale ether trust had a premium of -4.62%, possibly a sign that investors are cashing out of their shares even as ether buyers accumulate via spot markets or other investment vehicles. (Grayscale is a unit of Digital Currency Group, which owns CoinDesk.)
Another explanation could be that the negative premium represents increased competition among providers of publicly traded ether products. An application was recently filed in Canada for what would be North America’s second ether ETF, CoinDesk reported Tuesday.
Along with ether, decentralized finance assets were in the green on Wednesday. The sector gained an aggregate 9.5%, according to data from Messari.
Digital assets on the CoinDesk 20 are up on Wednesday. Notable winners as of 21:00 UTC (4:00 p.m. ET):