Tue, Jun 25, 2019 - Page 10 News List

Bitcoin falls after weekend jump

Reuters, LONDON

Bitcoin yesterday pulled back from 18-month highs after jumping more than 10 percent over the weekend, with analysts ascribing the spike to growing optimism over the adoption of cryptocurrencies after Facebook Inc unveiled its Libra digital coin.

The biggest cryptocurrency touched US$11,247.63 on the Bitstamp exchange on Sunday, its highest since March last year.

Yesterday morning it had pulled back from those highs, and was last down 0.5 percent at US$10,786.

Mati Greenspan, an analyst at eToro, said the gains underscored optimism among retail investors over moves by major companies to adopt cryptocurrencies.

“Traders are speculating on future involvement of large players like Facebook,” he said. “They believe that Libra will create mass awareness of cryptocurrencies and act as a gateway to adoption.”

Bitcoin’s climb to above US$11,000 for the first time in 15 months sparked gains yesterday in related Asian stocks.

GMO Internet Inc climbed 7 percent in Tokyo to its highest level since October last year, while Metaps Inc jumped 11 percent, Remixpoint Inc 6.2 percent and Ceres Inc 4.4 percent.

In Seoul, Vidente Co climbed as much as 5.4 percent and Woori Technology Investment Co added 4.6 percent.

“Bitcoin resurgence should be a definite reason behind these gains,” said Supun Walpola, an analyst with LightStream research who publishes on Smartkarma.

“Going long on stocks that have exposure to cryptocurrency is something that we have seen in the past during a bitcoin/cryptocurrency bull run — especially with those who want to avoid the volatility of crypto, but at the same time want to have some exposure into these markets,” he said.

Walpola said that the impact of cryptocurrency gains differs widely among different companies, with a relatively smaller bottom-line boost at larger firms such as GMO than at smaller ones like Remixpoint.

“But something that we have seen in the past is that the stock prices tend to increase more than the actual benefit that these companies would get during a crypto surge, which has always resulted in immediate corrections,” the analyst said in an e-mail.

Additional reporting by Bloomberg

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