An illustration showing the cryptocurrency bitcoin with a price chart in the background.
STR | NurPhoto via Getty Images
Bitcoin surged Sunday evening topping $39,000 for the first time since mid-June as sentiment turned bullish following a recent sell-off.
The cryptocurrency was trading at around $38,059.84 at 11:05 p.m. ET, according to CoinDesk data, up nearly 11% from the same time 24-hours prior. Bitcoin had previously hit a 24-hour high of $39,544.29, the highest level since June 16.
Bitcoin’s rally lifted other cryptocurrencies with ether up 5.9% above $2,299.55. The entire cryptocurrency market added over $114 billion in value in 24 hours as of 11:05 p.m. ET, according to data from Coinmarketcap.com.
The rally comes after bitcoin recently fell below $30,000 after a global sell-off in stocks, sparking fears that it could plunge even further.
“I think we saw an accumulation period around 29-30K, indicating bullishness and a potential move towards $40K for Bitcoin,” said Vijay Ayyar, head of business development at cryptocurrency exchange Luno.
Musk, Dorsey, Wood in focus
Twitter CEO Jack Dorsey, Tesla CEO Elon Musk and ARK Invest CEO Cathie Wood all recently spoke during a closely watched bitcoin conference called “The B-Word.”
Musk said that Tesla would likely start accepting bitcoin for vehicle purchases again as a greater share of bitcoin mining switches to renewable energy. In May, Tesla suspended vehicle purchases using the cryptocurrency out of concern over the “rapidly increasing use of fossil fuels for bitcoin mining.”
Bitcoin mining is the energy-intensive process of creating new coins, which involves solving complex math problems. The computational power required to do so also consumes a lot of energy.
“The Chinese trading day has opened up, and the Elon/Jack/Cathie talk was super bullish,” said Alex Brammer of Luxor Mining, a cryptocurrency pool built for advanced miners.
There have been other bullish headlines for bitcoin. E-commerce giant Amazon is looking to add a digital currency and blockchain expert to its payments team, suggesting it could be taking a closer look at bitcoin and other cryptocurrencies. An Amazon spokesperson said that the company is “inspired by the innovation happening in the cryptocurrency space and are exploring what this could look like on Amazon.”
These bullish moves have also contributed to a so-called “short squeeze,” according to bitcoin mining engineer Brandon Arvanaghi.
Investors who short bitcoin are betting that the price will fall further. But if the price goes higher, these investors look to cut losses and exit their short positions, which helps to push the price even higher.
“I think the extent of the jump was probably driven by over-leverage shorts,” Luno’s Ayyar said.
Meanwhile, some of the issues that have weighed on bitcoin’s price have begun to clear up. Over the past few months, China has renewed its crackdown on cryptocurrencies targeting mining and trading. And concerns over the carbon footprint of bitcoin mining are starting to wane.
Luxor Mining’s Brammer said the uncertainty around the environmental impact of mining and the Chinese regulatory concerns have “worn off.”