In the last 24 hours, Bitcoin [BTC] managed to trade above $5,000 for the first time since late November. The Bitcoin price was sitting at $5,049.37, at time of writing.
It is worth noting that it has now broken above its 200-day moving average:
There are contrasting views about what caused this sudden spike, with some claiming it is tied to changing market fundamentals and others pointing to a hoax.
Bitcoin price spike — just a gag?
The website Finance Magnates published an article on Monday with the headline, ‘SEC Drops the Bomb: Approves Bitcoin ETFs’.
This would have been massive news for the BTC investment community as it would have gone a long way to mainstreaming the cryptocurrency.
Alas, the article was amended to include ‘[April Fool’s!]’ at the start of the headline on Tuesday.
Business Insider quotes George McDonaugh, the CEO and cofounder of KR1, as saying, ‘there have . . . been rumours about buying bots going awol after some fake news about an ETF green light from the SEC was released as part of an April Fools’ joke. You literally can’t make this stuff up.’
He, however, favours the idea that the market was betting against $415 million dollars of short positions.
Appearing on CNBC, Brian Kelly the founder and CEO of digital currency investment firm BKCM, has a different theory.
His view is that the market has bottomed out and that the fundamentals have changed.
He said the following:
‘You have that one last flush-out, and then the market starts to trade higher…what’s interesting about this move is it’s happening on improving fundamentals and improving institutional sentiment.’
Commenting on the rumour that it was a single major anonymous buyer that sparked the run, he said:
‘Even high net worth individuals, family offices, are starting to take a serious interest … there’s a couple major brokerage firms that are rolling out some custody solutions. So there’s quite a bid going on under the surface.’
Going forward, a major challenge for the cryptocurrency, indeed all cryptocurrency is not just scalability, but the way it fits into the regulatory environment.
The IRS still treats cryptocurrencies as property, meaning that each instance of spending results in a taxable event.
Mass adoption may well hinge on governance issues, perhaps more so than the various technical features of a given cryptocurrency.
For Money Morning
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