Bitcoin mounts recovery following crypto crash

Bitcoin prices have staged a recovery on Thursday as a number of prominent investors and crypto backers reiterated their support for the digital currency.

In late-morning trading in London, Bitcoin was up 2.3% over the last 24 hours at US$40,454, once again above the key US$40,000 level and coming off yesterday’s low of just under US$32,000 at the peak of the selloff.

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The rebound appears to have been encouraged by backing for Bitcoin from key figures in the market such as Ark Investment boss Cathie Wood, who reiterated a forecast for Bitcoin to reach US$500,000 and said the current slump meant the digital coin and other cryptos were currently “on-sale”.

Meanwhile, crypto key figure and Tesla boss Elon Musk also appeared to reiterate his backing for the digital currency amid the market rout, tweeting that Tesla had ‘diamond hands’, a common refrain among online investors referring to holding onto an asset despite declines in value in the expectation that the asset with regain ground and increase at a later date.

The tweet was interpreted to be referring to Tesla’s US$1bn+ Bitcoin stash that was reported in February, which in turn may have alleviated investor fears that the company would begin selling its holdings and send the price tumbling further.

Tesla has ???? ????

— Elon Musk (@elonmusk) May 19, 2021

Meanwhile, crypto investors licking their wounds may also have found relief in the fact that some institutions are still opening their doors to crypto despite the steep downturn in the market.

On Thursday, US banking giant Wells Fargo & Co () said it will introduce professionally managed crypto funds for its wealthier customers, saying digital currencies had “evolved into a viable investment asset”.

“We view digital assets as an alternative investment for qualified investors through a professionally managed fund. Due to the uniqueness, complexity and continued evolution of these assets, we plan to produce a series of reports with a goal of increasing investor education and understanding of cryptocurrencies”, the bank said.