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Bitcoin spike blamed on April Fools joke – but that's not why it rallied



Bitcoin was not immune to April Fools' Day jokes.

The most likely explanation, he said, is a Reuters report of a private buyer buying more than $ 1

00 million worth of bitcoin over of a short period. Given the small daily trading volume of bitcoin, "that order would be enough to have an impact," he said.

"Crypto is famous for its long history of volatility like this. TWEET

Another rumor was that Berkshire Hathaway CEO Warren Buffett – one of Bitcoin's most vocal critics – was diversifying into the asset class. As a founder and CEO of BKCM Brian Kelly put it, "There's no way" that's why.

A more realistic possibility is that bitcoin hit a key technical level, he said. Kelly has a $ 4,200 price level triggering and stop loss trade. In bitcoin and other assets, traders will often set a certain level for when they automatically cover their short.

TWEET

"Everybody who panicked and sold is already out," Kelly told CNBC Tuesday,

Arca Funds CIO Jeff Dorman, and former trader for Lehman, Merrill, Citadel said even if buying by trading algorithms kicked off the euphoria, that would have reversed quickly if investors were eager to sell. Instead, the rally boosted bitcoin to its highest level since November. This particular rally was caused by a "simple" imbalance of more sellers than buyers, he said.

"The bigger magnitude of moves in crypto makes it more interesting than a story, but it's not that different from any other asset class , "Dorman said. "Buyers outweighed sellers and market makers felt the pressure so they took their markets higher, triggering stop losses and liquidations, which added more buy pressure."

Bitcoin prices have seen a relatively calm 2019 after a year of volatility. The cryptocurrency dropped roughly 75 percent last year after climbing to a high of nearly $ 20,000 at the end of 2017. It still has to recover anywhere near high that since and was trading near $ 4,728 on Tuesday afternoon.

But still, Dorman said some investors may be looking to get back in.

"The fact that every little dip has been bought in the last few weeks shows that investors are not afraid of sell-offs, they are hoping for them so they can buy more , "he said. "This certainly raises the near-term floor, but this sentiment can change on a dime too."


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