Bitcoin rises 9% to 10-day high above $9,000

  • Bitcoin climbed 9.7 percent to $9,346, its highest since Feb. 4, according to CoinDesk's bitcoin price index, which tracks prices from four major exchanges.
  • The latest reports about South Korean regulation marked a toned-down approach, in contrast to fears in the last several weeks that the government would close down cryptocurrency exchanges.
  • Analysts also said that comments by financial regulators last week before the Senate Banking Committee that balanced regulation with consumer protection are helping prices recover.
  • Bitcoin remains more than 30 percent lower for the year so far.

Bitcoin topped the psychologically key $9,000 level to hit a 10-day high Wednesday amid improved sentiment about government regulation.

The cryptocurrency climbed 9.7 percent to $9,346, its highest since Feb. 4, according to CoinDesk's bitcoin price index, which tracks prices from four major exchanges. As of 12:50 p.m. ET, Bitcoin was about 9 percent higher near $9,313.

"Sentiment has changed. The Senate hearing a week ago was positive. That definitely helped to create a more optimistic view," said Nick Kirk, quantitative developer and data scientist at Cypher Capital, a cryptocurrency trading firm. He added that news out of South Korea has been OK.

The latest reports about South Korean regulation marked a toned-down approach, in contrast to fears in the last several weeks that the government would close down cryptocurrency exchanges.

English-language news site BusinessKorea reported Monday local time that a government official involved with a virtual currency task force said Sunday that the country is considering additional regulation similar to the "BitLicense" the New York State Department of Financial Services requires for cryptocurrency exchanges in the state.

Bitcoin three-month performance

Source: CoinDesk

Separately, South Korean authorities plan to focus on taking action against illegal activity in cryptocurrency trading.

"The government's basic rule is to prevent any illegal acts or uncertainties regarding cryptocurrency trade, while eagerly nurturing blockchain technology," Hong Nam-ki, minister of the Office for Government Policy Coordination, said in a statement reported late Tuesday New York time by Reuters. "But, the government is still divided with many opinions ranging from an outright ban on cryptocurrency trading to bringing the institutions that handle the currency into the system."

The statement was made in response to an online South Korean petition that garnered more than 220,000 signatures to protest cryptocurrency regulation.

Bitcoin has struggled in the last two months amid some back-and-forth on cryptocurrency policy by South Korean regulators. The government did enact a ban on anonymous trading accounts in late January.

Japanese cryptocurrency exchange CoinCheck, which suffered the largest hack in the industry, also successfully resumed yen withdrawals on Tuesday.

Bitcoin remains more than 30 percent lower for the year so far. But with Wednesday's gains, bitcoin is up about $3,000 from two-month lows hit last week, just ahead of a Senate Banking, Housing and Urban Affairs Committee hearing on cryptocurrencies.

The chairmen of the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission said that different federal agencies are trying to coordinate policy on cryptocurrencies and protect consumers. Their comments also focused on regulating sales of new digital coins, or initial coin offerings.

"The recent CFTC and SEC talks have been positive towards 'pure cryptocurrencies' like bitcoin that began with mining as opposed to an ICO, painting a bullish medium-long term picture," said Alex Sunnarborg, founding partner of Tetras Capital. He added that other developments helping the longer-term outlook for bitcoin include the "impressive" growth of the Lightning Network, a system that intends to accelerate bitcoin transaction speeds.

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