Bitcoin passes $16,000 as rebound begins

Bitcoin rallied past $16,000 on Tuesday as traders of the world’s biggest digital currency sought to draw a line under its roller coaster five-day slump.

The tokens rose 16 per cent to as much as $16,039.51, the biggest gain on a closing basis in more than two weeks and the first in six days. Rival currencies litecoin and ethereum were up 4.4 per cent and 2.6 per cent, respectively, according to data compiled by Bloomberg.

The gains will be a welcome relief for crypto bulls, after bitcoin declined 26 per cent in the five days through Monday in what was seen as a major test for the nascent digital currency industry. The advance suggests that, even as financial authorities issue warnings about the risks of a bubble in the asset class, investor interest remains intact, at least for now.

“The most important question facing it is whether the recent price correction will prove to be what market participants refer to as ‘healthy’,” Mohamed El-Erian wrote in a Bloomberg View column Tuesday. In other words, one that shakes out “excessive irrational exuberance, provides for the entry of institutional investors, encourages the development of market-deepening products, and widens and balances out the investor base and the product offering,” he said.