Bitcoin surges towards $40,000 mark on Amazon rumours

World's biggest cryptocurrency was up 13% in early trading on Monday morning

FILE PHOTO: Representation of the virtual currency Bitcoin is seen on a motherboard in this picture illustration taken April 24, 2020. REUTERS/Dado Ruvic /Illustration/File Photo

Bitcoin gained more than 13 per cent in value on Monday morning as it led a rebound in cryptocurrency valuations from their recent slump.

The world's biggest cryptocurrency rose to $39,179.82 on the Luxembourg-based Bitstamp exchange by 10.30am UAE time, which is partly a natural correction given the recent slump.

It is also a response to an unconfirmed report by London-based newspaper City AM that Amazon is preparing to accept Bitcoin as a method of payment, as well as working on its own token concept. Amazon did not immediately respond to a request to comment.

"Over the past two to three months, we have seen Bitcoin pull back after a historic rally to $64,000. This is quite normal with any meteoric rise in an asset's price," said Vijay Ayyar, head of business development at cryptocurrency company Luno.

"While we had a 50 per cent correction as the first leg of a corrective rally, we are potentially now seeing the immediate bounce that could take Bitcoin beyond $40,000, to around $45,000 to $48,000," he said.

The revival in Bitcoin's price pushed its market capitalisation back up to just below $796 billion and means the cryptocurrency has increased in value by more than 32 per cent since falling to $29,539 during last Tuesday's slump.

Other cryptocurrencies also rebounded in value on Monday, with Ether trading more than 10 per cent higher at $2,385.60 and XRP up 11 per cent to $0.675.

Traders in cryptocurrencies also appear to be less worried about the threat of regulation, at least in the US, according to Naeem Aslam, chief market analyst at broker Avatrade.

A number of asset managers have been waiting for the Securities and Exchange Commission to approve their applications to create a Bitcoin exchange-traded fund but the regulator has yet to give the green light to any.

A Bitcoin Trust operated by Grayscale currently has more than $21bn of assets under management, but it charges investors annual fees of 2 per cent.

"It seems more possible today that the SEC will pass the Bitcoin ETF – whenever that will happen," Mr Aslam said. "In terms of Bitcoin's price action, we are more focused on the $45,000 level and once the price is above that, we are very likely to see some more bullish bets coming into the market."

A Bitcoin ETF run by Canadian digital asset manager 3iQ already trades on the Toronto stock exchange and recently secured a secondary listing on Nasdaq Dubai.

Updated: July 27th 2021, 6:08 AM
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