Bitcoin has swung wildly this week, as many had expected it to, with it losing $1,000 per bitcoin a few days ago before suddenly shooting back up earlier today.
The bitcoin price is now at over $9,000 per bitcoin after dropping to lows of almost $7,000 on Thursday–and heading fast towards the psychological $10,000 mark, according to the latest prices from Luxembourg-based exchange Bitstamp.
Elsewhere, other major cryptocurrencies ethereum, litecoin, Ripple’s XRP, and bitcoin cash rallied between 7% and 23%, adding billions to the value of the combined cryptocurrency market.
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The bitcoin price had been treading water for[+]
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Many bitcoin and cryptocurrency market analysts pointed to comments made by China’s president President Xi Jinping that the country should “seize the opportunity” of bitcoin’s blockchain technology as the reason behind bitcoin’s sudden rally.
China banned bitcoin and cryptocurrency exchanges in 2017 and some took Xi’s blockchain comments as a sign the country could ease bitcoin and crypto restrictions.
“We must take the blockchain as an important breakthrough for independent innovation of core technologies,” Xi reportedly said, speaking at the 18th collective study of the Political Bureau of the Central Committee in Beijing.
“[We must] clarify the main direction, increase investment, focus on a number of key core technologies, and accelerate the development of blockchain technology and industrial innovation.”
However, Xi’s comments, which referred only to blockchain technology and not to bitcoin and cryptocurrencies, might not have been the driver behind bitcoin’s recovery.
Following bitcoin’s sudden drop earlier this week, bitcoin and crypto investors feared the worst wasn’t over the for the market.
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The bitcoin price has suddenly surged after a[+]
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Facebook’s chief executive Mark Zuckerberg was savaged by U.S. senators over his plans for a bitcoin rival dubbed libra and crypto investors are fretting there could be a global crackdown on bitcoin and other digital tokens.
Elsewhere, technical data pointed to a so-called “death cross” for bitcoin, while the Fear & Greed Index slumped and a Twitter reading of investor temperature was poor.
“Sentiment in the crypto market is very low right now,” eToro senior market analyst Mati Greenspan wrote in a note to clients before the pump earlier today.
This sentiment slump meant investors bet against the bitcoin price, predicting it would move lower.
When the bitcoin price recovered a couple of hundred dollars per bitcoin in just a few minutes, some $150 million worth of short positions on the Seychelles-based BitMEX crypto exchange were liquidated, according to bitcoin and cryptocurrency analytics provider Skew.
This triggered what’s known as a “short squeeze,” where an asset rapidly increases in value due to short sellers trying to cover their positions, resulting in buying volume that drives the price up.
“Sentiment can change pretty quickly in this market, especially while volumes are low,” Greenspan added in his earlier note.
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A small uptick in the bitcoin price led to[+]
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Bitcoin volumes have been struggling recently, leaving the market especially vulnerable to so-called whales placing large orders or liquidating short positions.
Bitcoin trading volume among the top ten biggest bitcoin and crypto exchanges has fallen to under $200 million a day, according to bitcoin and crypto data company Messari, down 20-fold from a peak of $4 billion per day just a few months ago.
Adding to the market turnaround, bitcoin futures exchange Bakkt recorded a new all-time high in daily trading volume with 1156 futures contracts traded today.
It was Bakkt’s lacklustre volumes that many believe triggered bitcoin’s fall from its $10,000 plateau late last month.
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Billy Bambrough
I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported…Read More
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