I guess we can all agree that it was a good Friday for the global crypto community this week. The prices of the top crypto coins saw a huge spike in just a few minutes on Friday, October 25, with Bitcoin(BTC)trade climbing all the way up to a little over $10,000.
This is a substantial rise from the $7,000 mark it hovered around on Thursday, and analysts believe that the largest virtual currency by market capitalization could continue even further with this momentum over the coming weeks.
Bitcoin is not alone in this 10,000 mark home run. Statistics gathered showed that essentiall all of the other top digital assets such as Ethereum (ETH)trade, Bitcoin Cash (BCH), Litecoin (LTC)trade, and Ripple (XRP)trade also saw a significant increase that same day. Data shows that they added billions to the value of the global crypto market, with their values rallying around 7 to 23%. A pretty remarkable Friday, I must say.
While these are stripes worth celebrating, we can’t help but question the reason behind the sudden jump. After all, a good knowledge of the factors that influence the price of virtual currencies is critical to predicting the crypto market.
As expected, analysts started digging deep to ascertain the cause besides the obvious cause tied to the statements of China’s President Xi Jinping, embracing blockchain technology in unprecedented manner. Although the statements coincided with the time of the price jump, we do have some reservations as to whether or not that is the actual cause.
For starters, China banned crypto trading and ICOs since 2017, and there haven’t been any significant signs of revoking the order since then. Was President XI insinuating a major comeback on that decree? Is China really considering Bitcoin or other cryptocurrencies? These are questions we are yet to get answers to
However, President Xi was quoted saying:
“We must take blockchain as an important breakthrough for independent innovation of core technologies. [We must] clarify the main direction, increase investment, focus on a number of key core technologies, and accelerate the development of blockchain technology and industrial innovation.”
A ton of market analysts believe this particular statement caused the spike as the people of China believe the government could make less stringent crypto laws in the near future.
The Short Squeeze Theory
Another notable reason for the spike is attributed to short positions on BitMEX cryptocurrency exchange that were liquidated around that time as well. The short positions are said to amount to a total of $150 million.
According to those familiar with the matter, this liquidation triggered what is known as “short squeeze.” The term refers to a period in which the price of a tradable financial asset is jumping drastically because many traders who hold short positions get out of these positions and thus causing the asset’s price to rise forcefully.
Could this be the actual reason for the spike? These are all merely speculations at this point
