LONDON (Reuters) – Bitcoin burst to its highest level in almost five months on Tuesday, and sent smaller cryptographic baskets up, with analysts attribute to the move to a large order by an anonymous buyer who triggered a computerized trading frenzy.
FILE PHOTO: The Bitcoin.com buttons appear on the floor at the Consensus 2018 blockchain technology conference in New York City, New York, USA, May 16, 2018. REUTERS / Mike Segar / File Photo
The original and largest crypto competition increased as much as 20 percent in Asian trade, and exceeded $ 5,000 for the first time since mid-November. By late in the morning, it had settled on around $ 4,700, still up 15 percent in its biggest one-day gain since April last year.
Bitcoin increased to almost $ 20,000 by the end of 2017, the top of a bubble driven by retail investors who pushed crypto inverters on the agenda for regular financial companies. But great interest went down as prices collapsed, and now trading mainly by smaller hedge funds, tech firms and wealthy people.
Oliver von Landsberg-Sadie, CEO of London-based CryptoCompany BCB Group, said the move was probably triggered by an algorithmic order worth around $ 100 million across major exchanges – US-based Coinbase and Kraken and Luxembourg-based Bitstamp.
"There has been a single order that has been algorithmically ruled across these three arenas, at around 20,000 BTCs," he said.
"If you look at the volumes of each of these three exchanges – it was in concert, synchronized, volume volumes of around 7000 BTC for one hour".
For a Bitcoin Price Graphic, see – tmsnrt.rs/2VadrPe
Analysts could not point to any specific news or developments in the crypto sector that could explain the mystery buyer's big order.
Developed price movements of the type that are rarely seen in traditional markets, are common in cryptographic markets, where liquidity is thin and prices are very opaque.
So big-size orders tend to spark buying from algorithmic traders, says Charlie Hayter, founder of the industry's website CryptoCompare.
As bitcoin increased, there were 6 million trades over an hour, Hayter said – three to four times the usual amount, with orders concentrated on Asian-based exchanges.
"You trigger other order books to play catch up, and it creates a bought frenzy."
Bitcoins surge sent smaller cryptographic courses, known as "altcoins", higher trade. Ethereum's ether and Ripple's XRP, respectively, the second and third largest coins, both jumped over 10 percent.
Price movements of smaller coins tend to be correlated with bitcoin, which still accounts for just over half the value of the crypto market.
"Usually bitcoin is the market leader and altcoins have a tendency to follow, both in terms of direction and emotion," said Mati Greenspan, an analyst at eToro in Israel. "Today bitcoin is in the driver's seat."
The markets for cryptocurrency have been relatively quiet so far this year, with bitcoin trading to today ranging from around $ 3,300 to $ 4,200.
There have been few catalysts for large price movements of the type seen last year. In 2018, fears of regulatory clampdowns and declining interest from private investors had a bitcoin decline of about three-quarters.
Reporting by Tom Wilson and Tommy Reggiori Wilkes; Editing by Abhinav Ramnarayan and Andrew Cawthorne