- Bitcoin’s surge of more than 23% on Tuesday to prices above $US5,000 is causing traders to scratch their heads.
- Some speculated that the jump was fuelled by an April Fools’ Day story falsely saying US regulators had approved bitcoin exchange-traded funds.
- “You literally can’t make this stuff up,” one market participant said.
Bitcoin’s surge of more than 23% on Tuesday to above $US5,000 a coin is causing traders to scratch their heads.
One theory that has emerged speculates that the jump was fuelled by an April Fools’ Day story on the website Finance Magnates that falsely said the US Securities and Exchange Commission was approving bitcoin exchange-traded funds after an “emergency meeting.”
Bitcoin rockets above $US5,000
“The United States Securities and Exchange Commission has made the decision to approve not one, but two applications for Bitcoin-based exchange traded funds (ETFs),” the site said. “Early next month, Bitcoin ETFs will be launched by Bitwise Asset Management and investment management firm VanEck.”
It’s unclear whether the gag was the culprit, especially as it was published the day before the spike. As of Tuesday, the article included the phrase “April Fool’s” in brackets in the headline.
There were $US415 million worth of short positions that the market might have been eager to bet against, said George McDonaugh, the CEO and cofounder of KR1, a London cryptocurrency and blockchain investment company.
Still, traders are stumped.
“There’s always a myriad of possible reasons why bitcoin has had a surge in price,” McDonaugh said in an email.
“There have also been rumours about buying bots going awol after some fake news about an ETF green light from the SEC was released as part of an April Fools’ joke. You literally can’t make this stuff up.”
“I’d veer towards the first explanation than the second,” he said.
Another analyst said the move was most likely caused by technicals. “The price passed the $US4,200 level to the upside overnight, a critical level that the market has been eyeing for a while,” said Mati Greenspan, a senior market analyst at eToro. “At this point, stop losses triggered a chain reaction and sent the price soaring.”
Before the rally, bitcoin had been having a quiet year, hovering between $US3,400 and $US4,000.
It’s a far cry from 2017, when crypto mania seized investors. Bitcoin began that year worth less than $US1,000 a coin before soaring by more than 2,000% to a high of $US19,511. Bitcoin plummeted 70% in 2018, reaching a low of $US3,136 in December.
Jonathan Garber contributed to this report.
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