April Fool's joke may be behind Bitcoin price spike

Cryptocurrencies
Bitcoin and other cryptocurrencies saw a sudden boost on Monday Credit: Chesnot/Getty Images Europe

An April Fool's joke is believed by some to be behind a rally that sent Bitcoin to its highest level in almost five months on Tuesday. 

The prank, which first emerged on the website Finance Magnates, claimed the US Securities and Exchange Commission had approved “not one, but two applications for Bitcoin-based exchange traded funds” in a “shockingly sudden” decision by the SEC following an “emergency meeting”.

Not long after the article appeared, Bitcoin’s price resurgence saw it gain a fifth value within 30 minutes of Asian trading, breaking past the $5,000 for the first time since mid-November. It marked the biggest single-day increase for the cryptocurrency since April last year.

Analysts were left puzzled by the increase as no significant news has emerged in recent days to trigger the market shift.

Others suggested that the sudden spike in the digital asset was driven by a sizeable order of Bitcoin by an unknown buyer, which triggered intense algorithm-based trading.

The order is estimated to be for 20,000 Bitcoin worth around $100m and spread across some of the world’s biggest cryptocurrency exchanges, including Californian-headquartered Coinbase and Kraken.

Digital currencies have faced a significant slump since the market’s $800bn peak at the start of 2018.

More than $260bn has been wiped off the value of Bitcoin since then, after waning investor sentiment caused the cryptocurrency bubble to burst.

According to Simon Peters, an analyst at eToro, the jump is likely to have resulted from “short sellers covering their positions”, which has put upward pressure on price.

He added that the shift in price could be a sign that the digital currency market is coming out of a slump.

“Bitcoin is on fire at the minute as it punches through its previous resistance level,” he said.

The rally has been followed by an upward push in the price of smaller cryptocurrencies, such as Ethereum and Litecoin. These so-called “alt-coins” have seen prince increases of up to 70pc since Bitcoin’s earlier boom.

Bitcoin trading has been relatively stable in 2019, with the price of the digital asset staying within a range of $3,300 and $4,200.

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