Since last week crypto community celebrates the return of bitcoin to the green with an inspiring bounce up to on Thursday, 12 April.
The sudden increase in bitcoin’s value was met with much fanfare and further speculation as to what caused the massive volume in trade in the preeminent cryptocurrency.
There are a number of reasons for bitcoin’s sudden surge in price and they have seemingly worked in tandem to boost the virtual currency’s value. While the exchange rate of bitcoin stands at around $8,157 after the weekend (at the press time), it’s about time to sum up all the factors.
Short squeeze
Forbes financial analyst Charles Hayter that the spike was due to what is known as a ‘short squeeze’ on the .
In layman’s terms, is caused by a turnaround in a stock’s price which forces short sellers to close their positions which in turn forces the price of a stock even higher.
bitcoin has endured a since it’s all time high of . However, as tensions have eased somewhat, short sellers were hard pressed to close their positions to prevent further losses as bitcoin began to rally on Thursday.
As a result, bitcoin enjoyed a , as well as a record for the most volume traded in a single hour as noted by Twitter users.
That was the biggest 1 hour volume candle in history. Over 38.5K traded ( ~270 million dollars ) 😲👇
— Armin van bitcoin ⚡ (@ArminVanBitcoin)
Tax sell-off over
A lot has been made of the effect the tax return season would have on American investors. Fundstrat’s Tom Lee in April as Americans geared up to pay the tax office this month.
However that the spike in bitcoin’s price could be due to buyers returning to the bitcoin market, having sold to pay income taxes on April 17. Some investors would have received tax rebates, and could well be reentering the market:
“The selling pressure associated with tax day has subsided right now. As people get their tax returns, there may be new money entering the market.”
bitcoin deemed halal
Cointelegraph initially and this was confirmed in a document published by Indonesian-based tech startup Blossom Finance this week.
Muhammad Abu Bakar, a Mufti, or Muslim legal expert and haziz, wrote the report which widely classifies cryptocurrencies as halal.
Given that the report was published on Thursday 12 April, a number of people speculated that Muslim cryptocurrency traders have entered the market, which may have had an effect on the trading volume that led to the surge.
Decrease in selling pressure
All in all, the first quarter of 2018 has not been kind to bitcoin and cryptocurrencies in general. A number of factors around the world after lofty highs late last year.
In January, created mass uncertainty in the Far East markets. With South Korea a hub for cryptocurrency trading due to its , talk of a trading ban in the country . China’s staunch as well which furthered negative sentiments.
Furthermore, a number of prominent financial leaders were scathing in their standpoints towards cryptocurrencies at the World Economic Forum in Davos in January. There were widespread calls for . These claims though were counterpoised by America’s Securities Exchange Commission (SEC) and Commodities and Futures Trading Commission (CFTC) hearing early in February.
Both the SEC and CFTC , promising to produce regulations that foster development of the sector, while protecting investors from initial coin offering (ICO) scams. after the hearing.
Less than a month later, bitcoin sunk lower, amid reports that trustees of defunct exchange had sold off over . Furthermore, let’s not forget about widespread bans of ICO advertising by major social media platforms and , as well as .
All of this has led to bitcoin being ‘oversold’, according to Tom Lee in an interview with . Holding onto his $28,000 prediction for the end of the year, Lee said bitcoin was is in similar position to the end of the bear market in 2014.
Bullish again?
Add in that world-renowned investor George Soros has given his Fund Management company , and it could well signal the end of a bearish period for bitcoin and its alt coins.
Venture capitalist investor Tim Draper has also added fuel to the fire, at a Blockchain event at the Draper University.
At the press time, bitcoin and other altcoins continue to deliver a positive dynamics, with the biggest cryptocurrency standing at the $8,157 rate.
Published at Tue, 17 Apr 2018 19:20:00 +0000
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