The renaissance moment of Bitcoin is inviting a lot of theories over what brought on the price surge, a recent Bloomberg reports assert that the said crypto market jump could be linked to algorithmic trading.
Algorithmic trading is basically a method that uses automated software in order to detect trends and determine when trades should be made. As per Bloomberg’s report on Wednesday, April 3, the said method has been on the rise in the last few months. Since September, the industry has observed 17 new algorithm or quantitative funds and an amount that purportedly comprises 40 percent of crypto hedge funds started during this period.
While in 2018 crypto bear market, the crypto funds, in general, lost around 72 percent, these algo funds have reported gains between 3 percent and 10 percent per month during the so-called crypto winter. Bloomberg adds that Bitcoin’s (BTC) unexpected 20 percent surge price on Tuesday, April 2, shortly after the Asian markets opened, could be attributed to the $100 million trade made on three major exchanges.
As per a Reuters report, where experts told that a 20,000 BTC order (around $100 million at press time) was spread across United States-based crypto exchanges Coinbase and Kraken, as well as Luxembourg’s Bitstamp. The giant order has triggered the bots to then start trading, forcing the prices and volumes to rise.
Bloomberg quotes some entrepreneurs that assert that algo trading will have a positive impact on the crypto industry. CFO of Malta-based crypto exchange Binance, Wei Zhou states that they are going to be the new rock stars of the industry.
In saying so, some others fear that algo trading can trigger market manipulation. Founder of the Los Angeles-based crypto hedge fund Ikigai, Travis Kling told Bloomberg that some of them could use fake orders to trick other traders.
The report further cites a series of articles and TV spots that share the possible reasons behind the visible market uprising. For instance, Bloomberg author Eric Lam recalled an April Fool’s Day story claiming that the U.S. Securities and Exchange Commission had finally approved a Bitcoin ETF as possibly affecting the crypto markets.
Bloomberg cited another reason, the upcoming question of Brexit, as some believe that investors are changing pounds to BTC in the wake of Britain’s divorce with the EU.