Bitcoin hit the new highs after suffering a giant fall last year. While some are optimistic about this being the transition of cryptocurrencies from bear to bull market while others are convinced its just another short squeeze.
A short squeeze is a financial con which is characterized by a rapid increase in the price of a stock when short sellers (sellers of bitcoin who expect the price to go down and then buy again) are rebuying the stock, it causes an increase in buying volume which drives the stock up.
The optimists are crediting the news like Swiss Giants opting to pay their employees in Bitcoin, Fiat cash being more viable for terrorist use compared to cryptocurrencies to project a positive image that is creating more demand for bitcoins. The former of which, however, has already been debunked as an April fool prank.
People are also crediting the recent development in Brexit for the surge in Bitcoin price. Speculations are that, following the chaos and uncertainty after Brexit, the pound is slowly losing ground against euros and Brits want a more stable currency to store their value.
On a day of practical jokes (April Fools), it looked as if the exchanges were getting to the spirit of the day as they showed the price of bitcoin to increase by 22% to about $5000– except the inflation was real. This huge movement of price was very unnatural to some which surfaced speculation that bitcoin whales were doing something to artificially pump up the price.
— Crypto Trader Pro (@CryptoTraderPro) April 2, 2019
But the increase in price per bitcoin can also be explained by algorithm traders or traders who were looking for a threshold to start trading. Bitcoin had been gaining a real momentum since the beginning of 2019 and it was only a matter of time it started breaking out. Many argued that bitcoin was oversold by the end of last year and needed to break $4200 to cause enough stir in the market. That seems to have been the case as the buzz around Bitcoin has increased dramatically since bitcoin hit that mark.
— Stefan Fincken ⚡️🔍🔦 (@artdesignbySF) April 2, 2019
There are several reasons for this price increase of bitcoins and it is almost impossible to put your finger and be sure about what exactly it is. It can be the breakpoint for bitcoin or the crypto universe as a whole or it can be another pump and dump like schemes carried out by some whales and short sellers.
There are plenty of reasons to be optimistic. The grim crypto bear market has suddenly lit up again and people are excited about cryptocurrencies again. While this certainly does not mean there is a bull market on the horizon nor it means bitcoin is going to replicate its meteoric rise from 2017’s, more investment in bitcoin certainly helps with stability and creating a positive buzz around it.
"Bitcoin is a bit like the immortal undead. Every time you think it's dead and buried, it just kind of jumps back out again." @EdVanDerWalt weighs in on Bitcoin's sudden spike https://t.co/neiEu6FbuO pic.twitter.com/MhkkrZtGV5
— Bloomberg (@business) April 2, 2019