Bitcoin claws its way back to $40,000 as cryptos rise

·3-min read
LONDON, ENGLAND - MAY 23: In this photo illustration, a visual representation of Bitcoin cryptocurrency is pictured on May 21, 2021 in London, England. Bitcoin is a decentralized digital currency, which has been in use since 2009. (Photo illustration by Mark Case/Getty Images)
The environmental impact of cryptos has been a source of much concern lately. Photo: Getty Images

Bitcoin remains volatile, recovering from a weekend sell-off, then dropping down to $38,000 (£2,6816) before clawing its way back up again on Thursday.

At the time of writing, bitcoin (BTC-USD) was up about 2.1%, trading at $40,261, although it remains far from all-time high of $63,000.

Earlier in the day it had dropped below $38,000. 

Ethereum (ETH-USD), the second-biggest cryptocurrency by market cap, was up about 2.6%, trading at $2,851, having gone as low as $2,671 on Thursday morning. Joke token dogecoin (DOGE-USD) pared some morning losses but was still 1.9% down.

The crypto losses earlier in the day had come as as Iran said it was banning the energy-consuming mining of cryptocurrencies after some of its cities experienced blackouts. This was possibly due to a drought that had affected hydro-electric power generation but cryptocurrency was draining more than 2GW from its grid each day, the country said.

The environmental impact of cryptos has been a source of much concern lately and North American bitcoin miners are working to bring transparency to their energy consumption.

Read more: How bad is bitcoin for the environment?

"Bitcoin's energy consumption, and in particular, the percentage of power coming from renewable energies, has been the source of a lot of fear, uncertainty, and doubt lately, so seeing mining companies volunteering to report publicly on this is a good thing, as long as they don't try to force any changes to the protocol without first reaching broad consensus across the entire network," said Mati Greenspan, CEO and founder of Quantumeconomics.io.

But bitcoin continues to get mainstream attention. Carl Icahn, a well-known New York activist investors, told Bloomberg he is looking to get into cryptocurrency in a “big way,” and may at some point put more than $1bn into an alternative currency.

Bitcoin rose on Thursday afternoon. Chart: Yahoo Finance UK
Bitcoin rose on Thursday afternoon. Chart: Yahoo Finance UK

And regulatory filings show Fidelity Investments’ first bitcoin fund has raised $102m from investors since launching in August.

"Nervousness in crypto markets remains high and traders seem to be less eager to 'catch the knife' than during last year's crash," said Michael Stark, research analyst at financial services company Exness, adding: "Ethereum hit support around $2,000 and has recovered quite strongly so far this week: valuation seems to be a key factor driving many participants' behaviour."

Meanwhile, Naeem Aslam, chief market analyst at Ava Trade, said that "bitcoin bulls have also been watching the four-hour time frame very closely and hoping that the bitcoin price will stay above the 50-day SMA (simple moving average)."

"Unfortunately, there aren’t much signs of strength there as well and if the bitcoin price fails to win its war against the 50-day SMA and doesn’t stay above the 50-day SMA, then we are likely to see more weakness."

Watch: What are the risks of investing in cryptocurrency?

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting