The speculative frenzy that gripped a slew of retail stocks of dying companies spread to the crypto world on Friday, with bitcoin surging as high as 16%.
The digital token rallied overnight after Elon Musk tweeted “#bitcoin” to his legions of followers and daily traders faced restrictions on trading some of his favorite stocks.
Earlier this month, the cryptocurrency had plunged from a record high as daily traders sought bigger returns on stocks like GameStop Corp., which attracted the attention of members on Reddit’s WallStreetBets forum .
Cryptocurrency is no stranger to the attacks of speculative mania. It closed 2020 up 200% in three months as Wall Street showed greater interest in it. But that move paled in comparison to the returns seen by the WSB crowd, where day traders focused heavily on shorting stocks and used options to generate profits exceeding 900% in some cases.
On Thursday, that furor attracted the attention of Washington and regulators, prompting online brokerages to restrict the trading of certain stocks and options.
Robinhood Markets, the brokerage that introduced the commission-free trading structure that animated the retail scene, is demanding higher margins to trade some of the hottest stocks and on Friday limited trading in bitcoin and other digital tokens that have joined the party. That did little to dampen demand for an asset that has long been a crowd favorite online.
Musk’s Twitter page simply said #bitcoin without further explanation, but speculation that the richest man in the world could be a bitcoin investor was enough to trigger the dramatic rally. Prices skyrocketed within minutes, the biggest intraday move in nearly a year.
“This great merger is due to Elon’s tweet,” said Antoni Trenchev, managing partner and co-founder of Nexo in London, which bills itself as the world’s largest crypto bank. Musk’s support for bitcoin “creates a safe zone for some of the smaller companies and possibly all of the S&P 500 to fund bitcoin,” he said.
Musk also tweeted an image from the cover of “Dogue” magazine, a reference to fashion magazine “Vogue.” He also sent messages calling Cyberpunk a great video game and said, “In hindsight, it was inevitable.”
Binance, the world’s largest cryptocurrency exchange by volume, briefly suspended withdrawals on Friday to address a large increase in requests. CEO Changpeng Zhao said user registrations and operations rose to an all-time high.
Coinbase, the largest digital asset exchange in the United States, said it was investigating delays with deposits and withdrawals.
Traders trying to read between the lines of Musk’s tweets interpreted his cryptic messages as endorsement of bitcoin and dogecoin, a digital currency originally created as a hoax. Dogecóin prices spiked higher on Friday, rising 300% in the past 24 hours to $ 0.04355, according to data from CoinMarketCap.
Cryptocurrency-related stocks also rose. Marathon Patent Group Inc. and Bit Digital Inc. were up at least 9%.