The majority of 2019 has been a nail biter for crypto market participants, as investors, traders, and analysts alike watched and waited for signs the elusive Bitcoin price bottom may be in.
Overnight last night, a massive rally occurred, taking the price of Bitcoin through strong resistance at $4,200 to roughly $4,800. Following the move, the entire crypto community is speculating on what caused the enormous price spike and if the rally signals the end of the bear market.
Crypto Community Conflicted Over What Sparked Bitcoin Price Rally
Bitcoin is the king of all speculative assets, and those that trade or invest in the cryptocurrency often speculate over the smallest details. When such a large movement occurs on Bitcoin charts, everyone starts talking and speculating on what the reasons were behind a rally.
Related Reading | Bitcoin Has a Massive $80M Sell Order, But Breaching it Could Lead to a Rally
With such a large rally following over a year of downtrend, the crypto community is buzzing more than usual, trying to figure out what was the fuel behind the powerful upward movement.
A Bitcoin April Fools Joke Gone Right?
Major media powerhouse Bloomberg believes that the rally may have been triggered by an April fools day joke suggesting that a Bitcoin ETF had been approved by the Securities and Exchange Commission.
According to Bloomberg, one potential culprit behind today’s price activity may be an April Fools’ Joke. An article was widely shared throughout the bitcoin community yesterday that falsely said the SEC approve bitcoin-based exchange trade funds.https://t.co/KNfOhu7XXB
— Bitcoin, Gold, Silver & Geopolitics (@Super_Crypto) April 2, 2019
The idea is that CPU-based algorithmic trading bots picked up on the news, and started buying the asset en masse near important resistance levels, breaking it and triggering a cascade of stop losses.
Altcoin Trading Pairs Get Short Squeezed
Another theory, is that following the apparent “alt season” that has graced the crypto market with substantial gains over the last few months, highly leveraged altcoins paired with Bitcoin on exchanges may have resulted in a short squeeze.
Theory, the move was not designed to rekt BTCUSD shorts, those are pretty rekt atm. On the other hand, what did get out of control lately on leverage side? uhm hint $ADA, $EOS, $TRX, $LTC, $ETH on BTC pair. This whole move is probably a long squeeze on lev alts. pic.twitter.com/mWqHf3ZbHa
— Walter Wyckoff (@walter_wyckoff) April 2, 2019
With so many traders in the green on altcoin trades, profits would quickly be taken at the first sign of altcoin pair ratios falling. And with a move as powerful as what was witnessed with Bitcoin, many altcoin trading pairs saw their ratios plummet as much as 10%. As the ratio drops in favor of Bitcoin, stop losses are triggered and traders begin to secure altcoin profit into BTC, which further drives up the price of Bitcoin.
BTC Is Scarce and Supply Is Fading
In a recent report, one economist claimed that Bitcoin was the fastest and highest rising asset ever, and the crypto’s specifically-designed scarcity is the reason for its ability to climb so quickly.
Timeframe: 2 hours
— A v B ⚡ (@ArminVanBitcoin) April 2, 2019
That scarcity is also being pointed at as a potential trigger for the current rally.
Related Reading | 2019 Crypto Alt Season Kicks Off With Over 20 Altcoins Doubling in Value
The truth behind the rally is likely a combination of all these potential reasons, with each claim offering some validity. Altcoins have indeed been on a profit-generating kick, and Bitcoin’s supply has been gobbled up by smart money accumulating at what in hindsight may be the crypto bear market bottom.
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