Bitcoin prices surged more than 5% in the early hours of 27th May, a more than six-month high that saw the digital currency breaking out of the relative calm it had experienced in the last several sessions.
Bitcoin prices reached a high of $479.39 between 07:00 and 07:04 UTC, which was its highest level since 4th November, 2015 and 5.6% higher than the currency’s opening price of $453.82. The digital currency retreated somewhat after reaching this high, dropping to a low of $470.12 between 08:45 and 08:59 UTC, before once again experiencing an upward climb that yielded a high of $477.87 between 12:45 and 12:59 UTC.
As for the exact reason behind the move, the verdict is still forming.
Some market participants speculated bitcoin’s rally was the result of manipulation on Chinese exchanges. It was pointed out on forums that bitcoin prices surged to nearly $500 on OKCoin and Huobi, while they failed to make such a rally on Bitfinex and Bitstamp.
One expert, however, provided a more data-driven approach. Petar Zivkovski, director of operations at full-service bitcoin trading platform Whaleclub, told CoinDesk that a short squeeze helped fuel bitcoin’s price rally. In addition, there were not enough sell orders to match the buy orders, which contributed to the currency’s sharp climb, he said.
Looking forward, the market data indicates there has been a major change in sentiment.
“Shorts have now been obliterated,” said Zivkovski, adding:
“Almost 80% of traders are now in a long position, signaling that market sentiment is overwhelmingly bullish and that players expect more upside in the aggregate.”
In comparison, the digital currency on the Ethereum network, ether, fell more than 10% during this period, according to Poloniex data.
The move is notable as the digital asset has been surging in volume in recent weeks on positioning from public figures and media that it is a competitor to bitcoin.
Charles L. Bovaird II is a financial writer and consultant with strong knowledge of securities markets and investing concepts.
Follow Charles Bovaird on Twitter here.
Tire tracks image via Shutterstock; Chart via CoinDesk