The world's largest cryptocurrency moved back into the $7,000 range as a key exchange in South Korea, one of bitcoin's biggest markets, came back online.
The digital currency hit a high of $7,100 Tuesday, up 6 percent this week after starting Monday around $6,600, according to data from CoinDesk. The cryptocurrency is still down about 50 percent since the beginning of 2018, and 64 percent from its high in December.
After losing the equivalent of $30 million in a June hack, Seoul-based Bithumb was forced by its banking partner Nonghyup Bank to temporarily stop taking new customers. The world's fifth largest exchange reopened account registrations again this week, according to local media outlet Yonhap News and multiple crypto industry news sites.
"All of this buying is coming from Asia," said Brian Kelly, founder and CEO of BKCM. "The biggest news in the market right now is that South Korea exchanges are coming back online."
Bithumb's daily trading volume had dropped to around $72 million at one point in August after the NH Bank news. By Tuesday, its 24-hour volume had recovered to $362 million, according to data from CoinMarketCap.com.
South Korea is the fourth largest market for bitcoin despite some tightening by regulators earlier this year. The country's top financial watchdog said in June it would require domestic banks to monitor all exchange accounts in compliance with Korean anti-money laundering laws.
South Korea's justice minister said in January that the government was considering a shutdown of cryptocurrency exchanges but got major pushback from retail investors. A petition asking the government to hold back on "unreasonable" regulation got 280,000 signatures following that announcement.
Institutional buyers
News of institutional interest in crypto has been another barometer for prices this summer.
On Tuesday, Morgan Creek Digital and Bitwise Asset Management announced a new fund aimed at investors like endowments, pension funds and family offices. The so-called Digital Asset Index Fund has a minimum $50,000 investment and gives investors exposure to a basket of cryptocurrencies. Bitcoin broke above $7,000 following that announcement, after trading in the $6,000 range for the majority of August.
Investors have been closely watching the arrival of any institutional money, especially in the form of exchange-traded funds. Bitcoin rallied 20 percent, above $8,000, in late July on rumors that another ETF proposed by VanEck, would be approved by the Securities and Exchange Commission in August. That decision was later postponed by the agency.
Investors might not see any meaningful ETF news anytime soon, judging by SEC decisions this summer.
Last week, the agency disapproved several proposals for what would have been the first-ever bitcoin ETF. The latest of a string of rejections this summer involved two ETFs filed by ProShares that would track bitcoin futures contracts, another from GraniteShares, and five leveraged and inverse ETFs from Direxion.
Much like in its rejection of the Winklevoss ETF, the SEC expressed concern about fraud and manipulation in bitcoin markets. But a letter by the SEC's lone dissenter, Commissioner Hester M. Peirce, after that decision gave the market some hope.
"The SEC's willingness to reconsider those decisions, and the positivity surrounding upcoming proposals, presents a favorable environment for market recovery," said Joe DiPasquale, CEO of cryptocurrency fund of hedge funds BitBull Capital.
DiPasquale said the Morgan Creek announcement was a short-term driver, too. But much of bitcoin's recent jump can also be attributed to investors getting more optimistic after seeing prices stabilize despite ETF rejections, he said.
Despite the uptick this week, eToro senior market analyst Mati Greenspan warned that this is far from a signal that bitcoin will go "from here to the moon by next month."
"Big money tends to be cautious, especially while we lack clarity," Greenspan said. "While the bear is gone, the bulls remain hesitant to reveal themselves."