Tuesday (02/04), Bitcoin soared to its highest price in five months and boosted altcoinsbes' prices. Some analysts argue, the movement occurred because there was one big buyer that triggered a trade based on computer algorithms.
Bitcoin (BTC) surged up to 20 percent in the Asian market, breaking US $ 5,000 for the first time since mid-November last year. On Tuesday afternoon, BTC was stable in the range of US $ 4,800, an increase of 16 percent. That was the biggest jump in a day for Bitcoin since April last year.
The topnotch crypto soared to US $ 20 thousand at the end of 2017, the culmination of a bubble driven by retail investors. But, last year crypto prices plummeted by more than 75 percent, and trade was dominated by hedge funds and crypto investment companies.
"The acquisition of Bitcoin may be triggered by a purchase of US $ 100 million spread in the Coinbase and Kraken crypto exchanges in America and Bitstamp in Luxembourg. There is one order of 20 thousand BTC which is managed algorithmically on all three exchanges, "explained Oliver von Landsberg-Sadie, CEO of BCB Group, a crypto brokerage company.
If the volume in all three exchanges is observed, there are a number of transactions of 7 thousand BTC that occur synchronously within an hour, added Landsberg-Sadie. However, no analyst finds any events or developments that can explain the motivation of the big buyer.
Before Tuesday, the crypto market tended to be calm since the beginning of the year, where Bitcoin was in the range of US $ 3,300-US $ 4,200. Many large investors are waiting and have not yet entered the crypto market. Anxiety about security violations and regulatory ambiguity is referred to as the reason for the lack of mainstream interest in crypto assets.
Bitcoin is considered not able to match traditional capital markets. This was marked by CBOE Global Markets, which last month said it would no longer offer Bitcoin futures trading. But CME Group, which launched Bitcoin futures after CBOE, still sells the futures product.
"Large price movements rarely seen in conventional capital markets are quite prevalent in the crypto market due to thin liquidity and transparent prices. "Big purchases can trigger trade-based computer algorithms," explained Charlie Hayter, founder of CryptoCompare.
When Bitcoin prices skyrocket, 6 million trades occur within an hour, three to four times the normal volume, with most of them occurring on the Asian crypto exchange, Hayter said.
The rising price of Bitcoin also caused the price of altcoins to soar. Ethereum (ETH) and Ripple (XRP), the second and third largest crypto, both jumped more than 10 percent.
Mati Greenspan, analyst at eToro explained, small crypto price movements tend to be correlated with Bitcoin. Usually, Bitcoin is a market leader and altcoins to follow, when talking about market direction and sentiment. On Tuesday, Bitcoin acted as a "driver".
Meanwhile, analysts at Bitcoin Tone Vays, argue that sometimes prices can move without cause. Vays said there should not always be a trigger for price movements, and it could just be speculation that pushed him. Bitcoin is no different from other assets, added Vays. source
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