The Bitcoin price led the rally, surging more than $1,000 in less than an hour and briefly surmounting the $8,000 checkpoint. At present, Bitcoin is trading at $7,740 on Bitfinex.
Earlier this week, the valuation of the cryptocurrency market dipped below $248 billion, to a monthly low. Today, on April 12, the valuation of the cryptocurrency market increased along with the bitcoin price.
Fueled by a dramatic Bitcoin price rally, the cryptocurrency market cap surged by more than $30 billion, peaking at $301.8 billion before settling back down to a present value of $298 billion. This represents a single-day increase of 12 percent, one of the market’s largest intraday rallies since December.
Analysts largely attributed the precipitous surge to a “bear trap,” which occurs when futures and margin traders attempt to short an asset but have their positions liquidated due to a price increase, forcing them to buy at market prices to cover their position.
Matthew Newton, an analyst at crypto brokerage eToro told:
“Whilst there has been some stability in the cryptocurrency markets over recent weeks, we’ve seen a record number of short positions building on major exchanges. When the price began to rise this afternoon, a large number of shorts with big positions were squeezed. The resulting interest from buyers increased momentum, causing the price to jump $1000 in 30 minutes.”
“The ratio of short margin trades versus longs has been increasing recently,” Nick Kirk, quantitative developer and data scientist at Cypher Capital, told CNBC. “Buying volume ticked up today and a lot of these short trades got liquidated, helping fuel the rally.”
The bitcoin price has followed the general trend of the market and has remained above $7,000 for 24 hours. Over the past 48 hours, the price of bitcoin has been stable in that region, and since April 9, the bitcoin price has not shown any major movements on both the upside and downside.
Bitcoin has not been able to demonstrate any form of stability ever since the entire market has been on a rapid decline since March 12. But, this week, the bitcoin price has shown some stability, sparking the anticipation of traders within the global market towards a potential short-term rally.
The stability of bitcoin throughout this week led to a strong bull run from $6,900 to $7,700, which occurred within a 30-minute window.
Impact of institutional investors
Earlier this month some of the largest institutional investors in the finance market including $8 billionaire George Soros, Rockefeller family’s venture capital fund VenRock, and the Rothschild have entered the cryptocurrency market.
The majority of investors were skeptical towards these investors entering the market when it has experienced one of the worst corrections in its history. But, historically, investors like Soros have tended to invest large sums of money in markets that are significantly down from their all-time highs, taking advantage of the downward trend.
“Bloomberg reports that Adam Fisher — who runs Soros Fund Management’s macro investing operation — has secured internal approval to begin trading cryptoassets. Fisher reportedly received the go-ahead to begin trading cryptocurrencies sometime during the last few months, which is notable given public statements Soros made about cryptoassets during the same period”.
If it is the rise in over-the-counter (OTC) market volume in cryptocurrencies like bitcoin and Ethereum that is triggering the current bull run of bitcoin, the future of the market is highly optimistic.