Bitcoin appears headed for a 15% gain this week. Ninety-six of the top 100 cryptocurrencies by market value are in the black. Increased trading volumes reflected growing investor confidence. The rally
Bitcoin appears headed for a 15% gain this week. Ninety-six of the top 100 cryptocurrencies by market value are in the black. Increased trading volumes reflected growing investor confidence. The rally traces back to Thursday, when a sudden surge in buying caught traders who had bet on falling prices off guard.
Mati Greenspan, senior market analyst at eToro, explained the mechanics. "This is what's known in the markets as a short squeeze. When a lot of people are short on heavy leverage, a small movement up can trigger someone's stop-loss," he said. "Keep in mind that when a short position gets closed it actually creates a buy order. After a prolonged period of moving within the range, stop losses start to pile up. And so, even a small movement in the market can trigger a chain reaction of stop losses all at once and lead to a breakout on the charts."
Bitcoin bounced between $6,500 and $7,500 over the previous two weeks. "We would normally look for a test of the blue line before moving forward. However, should the excitement start to come back into this market, it might not need to," Greenspan said.
"The ratio of short margin trades versus longs has been increasing recently," said Nick Kirk, a quantitative developer at Cypher Capital. "Buying volume ticked up today and a lot of these short trades got liquidated, helping fuel the rally."
Confidence extends beyond the technical picture. In an earlier Bloomberg conversation on April 11th, Greenspan predicted that Wall Street was "building bridges" and would "at least even things out" by bringing new capital. On April 6th, reports surfaced that George Soros, the legendary hedge fund manager, had received internal approval to trade digital assets. Adam Fisher, head of macro investing at Soros Fund Management, secured clearance for the move.
The data supports bullish sentiment. Hedge funds that entered cryptocurrency markets at the start of 2017 averaged returns of 2,908%, according to Hedge Fund Research. Traditional hedge funds over the same span returned 9%.
Major institutional players are staking ground. On April 10th, Venrock, the Rockefeller family's venture capital arm, announced a partnership with CoinFund, a cryptocurrency investment group. The Rockefeller family's net worth exceeds $1 trillion, and Venrock reportedly manages $2.6 billion in assets. David Pakman, a Venrock partner, said the firm "wanted to partner with this team that has been making investments and actually helping to architect a number of different crypto economies and crypto token-based projects." He continued: "There are a lot of crypto traders in the market. There are a lot of cryptocurrency hedge funds. This is different. To us, it looks a little bit more like venture capital." Venrock scored major wins with early Intel and Apple positions.
Unconfirmed reports also suggest the Rothschild family has begun accumulating crypto positions.
Tom Lee, co-founder of Fundstrat and a prominent Wall Street voice, called the rally overdue. "We still feel pretty confident that bitcoin is a great risk-reward and we think it could reach $25,000 by the end of the year," he said.
The surge extends across the digital asset landscape. Only a handful of coins among the top 100 are trading lower. Many have notched 24-hour gains of 20% or more.
Ripple, which ranks third by market capitalization behind Bitcoin and Ethereum, jumped 21% to $0.67. Bitcoin, by contrast, rose 5% today. Santander's announcement of OnePay FX, an international payments service built on Ripple's xCurrent technology, pushed XRP higher. The bank said the platform "uses blockchain-based technology to provide a fast, simple and secure way to transfer money internationally – offering value, transparency, and the trust and service customers expect from a bank like Santander." Santander became the first major bank to launch a blockchain payments service across multiple countries at once.
IOTA ranked tenth by market cap and soared 21%. NEM climbed 17%. OmiseGO, backed by Vitalik Buterin, gained 18%.
