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

Bitcoin price rose 16% 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% and 2.6%, respectively, according to data compiled by Bloomberg.

The gains will be a welcome relief for crypto bulls, after bitcoin declined 26% 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.

Beaten by rivals

The answer to that question may determine bitcoin’s future as a debate rages over the sustainability of the rally that’s seen it gain more than 1,500% this year. Bulls argue that the nature of the cryptocurrency and the blockchain technology behind it is a game changer for the world of finance, while bears say it has no intrinsic value and price moves display the hallmarks of a speculative asset bubble.

Amid bitcoin’s wild price ride, attention is also increasingly turning to rival cryptocurrencies. Since the largest cryptocurrency hit a record $19,511 on 18 December, it has actually underperformed peers such as ripple and ethereum.

Bitcoin is the crypto benchmark, but not the best representation of the technology, Mike McGlone, Bloomberg Intelligence analyst, wrote in a column on Sunday. A proper focus for institutional investors is likely the broader market, including “forks" and or 2G offshoots that address bitcoin’s flaws, he said.

When the frenzy subsides, 2Gs should continue to gain on bitcoin, according to McGlone. “Ethereum appears prime to assume benchmark status, though bitcoin forks ripple and litecoin are the primary up-and-coming contenders," he said. Bloomberg

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