Bitcoin edges back from US$40,000 as volatility lingers

NEW YORK: Bitcoin climbed back above US$40,000 on Wednesday for the first time this week, before edging off its highs, as recent volatility in the cryptocurrency market showed few signs of dampening down.

Bitcoin jumped as much as 6.5per cent to US$40,904, before easing back to around US$38,797 at 11:45 a.m. Eastern time. Smaller coins, which tend to rise and fall with the largest cryptocurrency, also gained, with ether climbing more than 7.5per cent to above US$2,915 earlier in the day.

Still, bitcoin is down 30per cent this month, and has lost over 37per cent from its record high of almost US$65,000 hit in April. It has gained over 40per cent this year, however.

"Cryptocurrency market volatility is not going away anytime soon," said Edward Moya, senior market analyst at OANDA. "Right now the aftermath of the crypto plunge is having everyone dig a little deeper to try to find out, are the ESG and regulatory concerns going to pose a major risk in the short term?"

Bitcoin's most recent slump has come amid concerns over the environmental impact of bitcoin production, an energy-intensive process known as mining, and as China has cracked down on the emerging sector.

Bitcoin touched a low of US$30,066 last week, its weakest since January, in highly volatile trading.

BlackRock Chief Executive Larry Fink said on Wednesday the world's largest asset manager is studying cryptocurrencies like bitcoin to determine whether the asset class could offer countercyclical benefits.

For now, it is too early to determine whether cryptocurrencies are "just a speculative trading tool" Fink said at the company's annual meeting.

(Reporting by John McCrank in New York and Tom Wilson in London; editing by Thyagaraju Adinarayan and Alistair Bell)