Bitcoin, which collapsed to a low of $3,100 in December, smashed through the $11,000 mark on Sunday after breaking through the critical $10,000 level. Both levels were considered highly unlikely only a few weeks ago. At a price just under $11,000 on Monday evening, the world’s largest digital coin by market capitalization recovered over half its historic increase during the peak of the crypto frenzy when it neared $20,000 before crashing almost 75%. 

Bitcoin's continued rise, which is also fueling rallies in Asian cryptocurrency stocks, illustrates the currency's resilience in the face of major skepticism and also cryptocurrency's widening acceptance by major established companies such as Facebook Inc. (FB), investment behemoth Fidelity, and others, as outlined in a detailed Bloomberg report. 

Crypto Money Has Been 'Waiting on the Sidelines'

“The bounce back of Bitcoin has been fairly extraordinary,” said George McDonaugh, chief executive and co-founder of London-based blockchain and cryptocurrency investment firm KR1 Plc, to Bloomberg just after the virtual currency breached the key $10,000 level on Friday. It was the first time that Bitcoin had reached that level in roughly 15 months. “Money didn’t leave the asset behind, it just sat on the sidelines waiting to get back in.” 

Some traders and ultra-bulls are betting Bitcoin can hit $50,000, per The Wall Street Journal.

This in part due to renewed mainstream interest in cryptocurrencies and the distributed ledger technology that it runs on. Facebook’s Libra is perhaps the highest profile crypto project, as the social media pioneer partners with companies such as Visa Inc. (V) and Uber Technologies Inc. (UBER) to build the system. 

Asian Crypto-Stocks Gain Momentum Alongside Bitcoin Rally

The crypto rally coincided with a rally in related stocks in Asia on Monday, per another Bloomberg report. In Tokyo, GMO Internet Inc. jumped 7%, while Metaphs Inc. climbed 11%, Remixpoint Inc. 6.2%, and Ceres Inc. increased 4.4%. In South Korea, Vidente Co. increased 5.4%, and Woori Technology Investment Co. jumped 4.6%. 

Supun Walpola, an analyst with LightStream, attributes gains in Asian crypto-stocks to Bitcoin’s resurgence. “Going long on stocks that have exposure to cryptocurrency is something that we have seen in the past during a Bitcoin/cryptocurrency bull run -- especially with those who want to avoid the volatility of crypto but at the same time want to have some exposure into these markets,” he said, adding that the increase in stock prices for these crypto companies typically increase more than the actual benefit that these firms would get during a crypto surge. This has “always resulted in immediate corrections,” Walpola wrote in an email to Bloomberg

That said, investors should check themselves before investing in crypto stocks despite their relatively lower risk, given “such strategies have often gone wrong when crypto markets turn red -- which could happen just about at any time,” said the analyst. 

While Bitcoin has eased back below $11,000 it is still dramatically higher than the $10,000 support level. Bitcoin's 2019 rebound – and that of other cryptocurrencies – will be tested by the latest calls by Treasury Secretary Steven Mnuchin for new global regulatory standards to bring cryptocurrency "out of the shadows" and to prevent illicit financing by criminals, terrorists and rogue nations. Crypto bulls say these rules would hobble the young industry, as outlined in another Bloomberg report. 

Looking Ahead 

Despite the growing demand for cryptocurrencies and signs that the long “crypto winter” is over, various headwinds threaten to pull Bitcoin back below $10,000, likely resulting in a downfall for the rest of the nascent industry. These risks position the digital coin for continued volatility as demonstrated in May. Alongside other downside drivers, the fact that bitcoins are used mostly for speculation, not commerce, has also been a main concern cited by bears.