Bitcoin has rebounded, rising above $22,000 for the first time since June 8 on the back of a rebound in global risk appetite, a rally that has also fueled a big rally in cryptocurrency-related stocks.
Bitcoin rose as much as 7.5% in intraday TRADING in the US, according to data. The rally pushed shares of major mining companies such as Marathon Digital(Mara.us) and RiotBlockchain(Riot.us) up as much as 36% and 23% in intraday trading, Core Scientific(corz.us) and Hut 8Mining(Hut.us) were also up more than 20 per cent at one point, and even software maker MicroStrategy(mstr.us), which has invested in bitcoin, was up 15 per cent at one point.
In fact, mining companies with relatively large bitcoin positions on their balance sheets have been the best performers during the bitcoin rally. Marathon and Hut8 are among the few publicly traded mining companies that have not sold mined cryptocurrency.
The rally in the broader market has also led some market watchers to speculate that cryptocurrency assets are temporarily bottoming out. Cryptocurrencies have proved resilient in the face of seemingly damaging news such as last week's worse-than-expected US inflation report, adding to signs that a sell-off that has cost digital assets about $2tn May be over, market watchers said.
"When the market starts to react positively to negative news, it may signal a temporary bottom for the time being as the panic may have priced in the negative news," MarcusSotiriou, analyst at GlobalBlock, said in a note on Monday.
In the past, however, continued low prices have forced most miners to sell bitcoin to cover operating costs and fulfill large purchase orders placed during the bull market of a few months ago as risk appetite has been suppressed. Among them, Cores Scientific sold most of its bitcoin holdings in June, while Bitfarms liquidated nearly half of its bitcoin inventory to repay loans.
Cryptocurrency-related stocks as a whole are still down so far this year, with Companies like Marathon and Riot both down about 70% year-to-date.