Bitcoin Price suddenly Skyrockets 17% to move above $8,000
Bitcoin price skyrocketed more than 17% in a sudden move on Thursday to above $8,000 at one point, according to Coinbase.
Trading was volatile. It was 15% higher near $7,715 as of 8:54 am ET, according to Coinbase. Bitcoin jumped from a low of $6,786 Thursday morning and traders are watching whether it can hold above $7,500.
The bitcoin price reached as high as $8,055 before shedding gains to trade near $7,680, according to data from CoinDesk.
Trading volume rose as bitcoin surged. 24-hour volume topped $7 billion for the 1st time since March 8. Bitcoin’s overall market cap Thursday neared $130 billion in early trading, according to Coinmarketcap.
“Once [bitcoin] broker higher, shorts were squeezed and forced to cover,” said Brian Kelly, CNBC contributor and head of BKCM.
Furthermore, a sudden jump in bitcoin price forces traders who had bet against the crypto to buy back into the market.
“The ratio of short margin trades versus longs has been increasing recently,” said Nick Kirk, quantitative developer and data scientist at Cypher Digital. “Buying volume ticked up today and a lot of these short trades got liquidated, helping fuel the rally.”
Bitcoin rose above $19,000 in December, a gain of 2,000% over the last 12 months.
However, bitcoin has since lost 2/3 of its value given worries about a regulatory crackdown.
Regulatory Crackdown pressured bitcoin price
According to traders, bitcoin and other cryptocurrencies were hurt with selling pressure ahead of the US tax deadline. As the April 17 deadline quickly approaches, it shows the selling pressure has simmered down.
Investors who traded bitcoin last year owe taxes since the Internal Revenue Service views it as property. Meaning, transactions are generally taxed. US households likely owe $25 billion in capital gains taxes for their cryptocurrency holdings.
“We believe there is selling pressures by crypto exchanges who are subject to income tax in US jurisdictions,” said Fundstrat’s Tom Lee last week.
“We believe selling pressures have been amplified by capital gains tax-related selling this year,” Lee wrote. “If this is correct, we should see improved dynamics after April 15.”
Additionally, some traders said Thursday’s move could be an unwinding of that pressure.
“I think it’s just some pent-up market movement,” Ansel Lindner, bitcoin investor and host of “Bitcoin & Markets” podcast, said. There’s also “some relief in the selling” ahead of tax day.
“Even though the price has been going down lately, the development of the next generation bitcoin infrastructure hasn’t stopped,” Lindner said.