Bitcoin prices spiked more than 17 percent on Thursday morning to above $8,000 before settling back down to the $7,600 range. There appears to be no obvious reason for the large move, but traders are speculating about what may be going on.
Some traders see the move as technical in nature and have noted a bullish breakout of a falling wedge pattern on Thursday. This breakout would typically signal that a bearish longer-term pattern is over and an uptrend can resume. Bitcoin’s weekly price chart also indicates the cryptocurrency may have found support at its 50-week moving average.
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Other traders believe Wall Street veteran Tom Lee sparked the bitcoin rally ahead of his talk at the CMT Symposium this morning. A bullish speech from a well-respected name could boost bitcoin’s credibility as an investment.
Bitcoin just spiked OVER $800. It happened in less than 30 minutes. Some traders think it's because Wall Street veteran Tom Lee is preparing a massive talk at #CMTSym2018 about cryptocurrencies. It starts at 9 AM ET.https://t.co/tjsXuWJTWh pic.twitter.com/8nVB6xuEsT
— StockTwits (@StockTwits) April 12, 2018
Others simply believe the big move came as a result of a tightly coiled short position in bitcoin.
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"Once [bitcoin] broke higher, shorts were squeezed and forced to cover," said Brian Kelly, head of BKCM. A massive short position in bitcoin has been building for weeks, and Cypher Capital reports that the heavy buying volume on Thursday triggered an automatic liquidation of these short positions, creating a textbook short squeeze.
Finally, some traders see the big move as simply a relief rally following a period of heavy selling pressure related to the U.S. tax deadline next week. Tax season selling may have driven the price of bitcoin low enough that as soon as it tapered off, a wave of buyers rushed in.
Regardless of the reason, bitcoin investors are welcoming any positive price action this year. The Bitcoin Investment Trust (OTC:GBTC) is down 48.2 percent so far in 2018.
Here's how other top cryptocurrencies were trading on Thursday morning:
- Ethereum was up by 10.4 percent.
- Ripple was up by 11.6 percent.
- Bitcoin Cash was up by 8.4 percent.
- EOS was up by 29.5 percent.
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