Bitcoin price today: Cryptocurrency does U-turn after flash crash; Bulls eye $55,000

Bitcoin price today edged higher for a third day following this weekend’s flash crash.

Cryptocurrency Bitcoin price today rose as much as 3.6% to $51,897, while other smaller tokens also advanced. (REUTERS)

Bitcoin price today edged higher for a third day following this weekend's flash crash, with chart watchers suggesting the rally may push the largest cryptocurrency back to around $55,000. Bitcoin price rose as much as 3.6% to $51,897 on Tuesday, while other smaller tokens also advanced. Bitcoin had dropped as much as 21% on Saturday. The Bloomberg Galaxy Crypto Index of the biggest digital assets gained 5.4% at one point during the session and a gauge of 100 coins added 5.8%. 

“Bottom line is the most leveraged and speculative marketplace in the world -- cryptos -- flushed out some of the excesses in thin weekend trading and is resuming the more enduring bullish trend,” said Mike McGlone, a Bloomberg Intelligence analyst. The market has seen speculative traders “getting stopped out, and is attracting the more enduring buy and hold types.”

Bitcoin and other cryptocurrencies dove this weekend amid a greater risk-off sentiment that also encompassed selloffs in many areas of the U.S. stock market. It happened as spiking inflation is forcing central banks to tighten monetary policy, threatening to reduce the liquidity tailwind that lifted a wide range of assets. 

“It's important to remember that these kinds of pullbacks are part and parcel of a market that is increasingly hungry for excessive risk,” Mati Greenspan, founder and CEO of Quantum Economics, wrote in a note. “Every once in a while, the riskiest parts of the market, in this case mostly meme coins and metaverse tokens, do need to be washed out.”

Cryptocurrencies have, following the weekend bruising, attempted to make a comeback. Bitcoin's 14-day relative strength index (RSI) of 36 shows it is very close to being in oversold territory on a technical basis, a measure investors utilize to identify buying and selling opportunities. Assets are considered overbought if the RSI crosses above 70 and oversold if it falls below 30. 

“Let's hope that we've already seen the worst of it,” said Greenspan. 

Iceland Cuts Power to Industry, Turns Away New Bitcoin Miners

(Bloomberg) -- A lack of power in Iceland has caused the island's main utility, Landsvirkjun, to reduce supplies to some industrial customers, such as aluminum smelters, data centers and fish meal factories, as well as turn away new Bitcoin miners.

Low hydro reservoir levels, a malfunction at a power station and a delay in obtaining power from an external producer led to the reduction, effective immediately, the company said on Tuesday.

Iceland's biggest electricity consumers are its giant smelters built decades ago to benefit from cheap power. Aluminum is one of the most energy-intensive industrial metals to produce, and traders have been bracing for supply cuts as the regional energy crunch deepens. Prices reached a 13-year high in October as Chinese producers faced a supply crunch, and the renewed surge in power prices is creating fresh risks to supply in Europe. Aluminum prices rose 1.1% to $2,616.50 a ton on Tuesday.

A more recent entrant are cryptocurrency miners, lured in by the cheap electricity needed for mining new coins after demand and prices have skyrocketed. Despite recent volatility, in dollar terms Bitcoin is up more than 80% year to date, and hit an all-time high of almost $69,000 in November. Hive Blockchain Technologies Ltd. from Canada, Hong Kong-listed Genesis Mining Ltd. and Bitfury Holding BV are among companies that have set up shop in the country. All power-supply requests from new clients mining electronic coins are now rejected, Landsvirkjun said.

Landsvirkjun said limitations of the distribution system mean it's unable to serve load points in the southwest from the country‘s biggest power station, Karahnjukavirkjun, located in the eastern part of the country. Century Aluminum Co.'s Grundartangi and Rio Tinto Plc's smelter are both in the western area that's suffering shortages, while Alcoa Corp.'s Fjardaal plant sits in the East Fjords with ample power.