After the downslide of Bitcoin price over the last few days, reaching $6,850, an unexpected surge in by around 6% caught almost everybody off guard. The cryptocurrency reached the $7,200 level in a little over an hour. Bitcoin price at the time of writing reached $7,341, although price is trying to stabilise by now.
This sudden bounce left traders absolutely bewildered. Experts on Twitter are shocked; most short-term forecasts of Bitcoin performance were seeing further drops in price. We yet have to see what analysts have to say about this, but some have already tried to explain.
Matthew Graham, chief executive of Sino Global Capital and an investor focusing on crypto and blockchain plays, suggests the jump came in response to news of US killing top Iranian commander in an air strike.
The attack caused in global markets going relatively haywire. Crude oil, for instance, jumped 3%, and gold easily saw a quick $10 gain in the minutes after the reports of this event were released. As Bitcoin is becoming more entangled with traditional economy, becoming a macro asset according to some analysts, it makes sense to suggest it is mutually affected by geopolitical risks.
However, other analysts are presuming this happened due a short squeeze. According to data from the research company Skew Markets, at least $16 million of short positions were liquidated on the largest crypto derivatives platform BitMEX during this massive spike.
Cryptocurrency and macro analyst Alex Krüger isn’t sure that the surge is due to the fact that Bitcoin is considered a safe haven given that the increase in price happened relatively later than other assets.
“Talking heads will soon be discussing how bitcoin is a safe haven and is going up because of Iran. Which is absolute nonsense”, he tweeted. “Round numbers are there to get run over, in both directions. I have a small long so I’ll be happy if speculators use the narrative to push prices up.”