Bitcoin jumped to more than $5,000 for the first time since November earlier today, putting cryptocurrencies on track for their biggest one-day gain in a year. Rumors, both credible and less credible, surround the currency’s rise.
Ethereum, the second-largest cryptocurrency by market cap also gained, up 5.7 per cent in the last 24 hours, according to coinmarketcap.com.
Bitcoin, which has skulked below $4,000 for most of the year, rose by as much as 24 per cent, according to Reuters data based on the Luxembourg-based Bitstamp exchange.
On Reddit, Bitcoin fans were popping champagne corks and talking about the new bull run.
Speculation around the reason for the jump was rife and ranged from an April Fools joke that Bitcoin was going to be cleared for ETFs in the U.S.—which some had took to be true—to Wall Street types deciding to spend their bonuses on crypto.
One of the more intriguing reasons presented was that as much as half a billion dollars had been liquidated on BitMEX, a trading market for derivatives.
On BitMEX, traders don’t possess the full amount of Bitcoin they are trading. Instead, BitMEX has an insurance fund for emergencies and a sudden, large upswing or downturn in price liquidates a lot of traders to keep the market balanced.
The massive price jump was predicted by one trader who speculated that a “black swan event” was about to happen. Crypto Bitlord—as he is known on Twitter—argued the BitMEX insurance fund was reaching a peak, indicating a large move.
As the price of Bitcoin rose, a whopping $500 million was liquidated on BitMEX, which uses XBT to represent BTC and has Tether (USDT) as its main trading pair. This trading pair accounts for 15 per cent of Bitcoin trading volume in the last 24 hours.
At the time of publishing, the price on BitMEX is still higher than other exchanges, showing it is leading the market.
While the above reason appears to be the most plausible, others pointed the finger at April Fools, whales, the Bithumb hack, and even wash trading for the sudden spike in price.
Despite the dramatic price move, Bitcoin is still more than 75 per cent below its all time high of almost $20,000 in December 2017. There’s a long way to go to reach those highs. Cries of “‘We’re back baby!!”—as seen all over Reddit— might be a tad premature.
Additional reporting by Tim Copeland
This post was originally published on Decrypt. Bitnewsbot curates, examines, and summarizes news from external services while producing its own original material. Copyrights from external sources will be credited as they pertain to their corresponding owners.
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