Bitcoin price hits 5-month high, mystery buyer seen as catalyst
LONDON: Bitcoin burst to its highest level in almost five months yesterday, sending smaller cryptocurrencies up, with analysts ascribing the move to a major order by an anonymous buyer that triggered a frenzy of computer-driven trading.
The cryptocurrency soared as much as 20 per cent in Asian trading, surpassing US$5,000 (S$6,800) for the first time since mid-November. By mid-morning, it had settled at around US$4,800, still up 16 per cent in its biggest one-day gain since April last year.
Bitcoin surged to near US$20,000 in late 2017, the peak of a bubble driven by retail investors that pushed cryptocurrencies onto the agenda of mainstream financial firms. But wide interest waned as prices collapsed, and now trading is mostly powered by smaller hedge funds, tech firms and wealthy individuals.
Mr Oliver von Landsberg-Sadie, chief executive of London-based cryptocurrency company BCB Group, said the move was likely triggered by an algorithmic order worth US$100 million spread across major exchanges - US-based Coinbase and Kraken and Luxembourg-based Bitstamp.
"There has been a single order that has been algorithmically managed across these three venues, of around 20,000 bitcoin," he said.
"If you look at the volumes on each of those three exchanges - there were in concert, synchronised, units of volume of around 7,000 bitcoin in an hour."
Outsized price moves of the kind rarely seen in traditional markets are still common in cryptocurrency markets, where liquidity is thin and prices highly opaque.
So orders of large magnitude tend to spark buying by algorithmic traders, said Mr Charlie Hayter, founder of industry website CryptoCompare.
As bitcoin surged, there were six million trades over an hour, Mr Hayter said - three to four times the usual amount, with orders concentrated on Asian-based exchanges. - REUTERS