HONG KONG – Bitcoin climbed suddenly Tuesday to the highest level since November, leading a surge in virtual currencies and ending three months of calm in the $160 billion market.
Traders struggled to pinpoint a reason for the rally, which increased the value of digital assets tracked by CoinMarketCap.com by about $17 billion in less than an hour and briefly lifted Bitcoin above $5,000.
Rival coins such as Ether, Ripple and Litecoin also jumped, as did cryptocurrency-linked stocks in Asia, including Remixpoint Inc. and Monex Group Inc.
While sudden swings in Bitcoin are nothing new, price action in the virtual currency has been relatively subdued this year as investors weighed the prospects for more mainstream adoption after last year’s 74 percent crash.
Market participants say big buy or sell orders in Bitcoin can often lead to outsized moves, in part because volume is spread across dozens of venues. Trend-following individual investors can also exacerbate volatility.
“The Bitcoin market and crypto-market in general continues to be small relative to the rest of the markets and emotional,” said Jehan Chu, managing partner at blockchain investment and advisory firm Kenetic Capital. “It’s still very much subject to waves of enthusiasm. I don’t think today is anything special other than a temporary enthusiasm.”
George Harrap, chief executive officer at cryptocurrency firm Bitspark, said he’s putting “most things on pause” until the market settles down. He said his contacts in the Bitcoin community have yet to come up with a reason for the sudden jump.
“The reason why? Anybody’s guess at the moment,” Harrap said.
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