Bitcoin rises 20 percent, mysterious buyer seen as catalyst



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LONDON (Reuters) – Bitcoin peaked in nearly five months on Tuesday, prompting an increase in cryptography rates, with analysts blaming the decision on an anonymous request from a buyer who sparked a frenzy of computer trading.

FILE PHOTO: The buttons of Bitcoin.com are displayed on the floor of the blockqain technology conference of Consensus 2018 in New York, New York, USA, on May 16, 2018. REUTERS / Mike Segar / File Photo

The largest and most original crypto-currency has risen by as much as 20 percent in Asian trade, surpassing $ 5,000 for the first time since mid-November. By late morning, the currency was around $ 4,700, representing a 15% increase in its highest gain in a day since April last year.

Bitcoin rose to nearly $ 20,000 by the end of 2017, the heyday of a retail-driven bubble that pushed encrypted currencies into the agenda of major financial institutions. But broad interest rates have declined as prices collapse, and now the talks are driven mostly by smaller hedge funds, technology firms and wealthy individuals.

Oliver von Landsberg-Sadie, chief executive of UK-based BCB Group, said the move was likely triggered by an algorithmic order valued at $ 100 million in key markets – US-based Coinbase and Kraken and Luxembourg's Bitstamp .

"There was a single order that was managed by algorithms at three locations, of about 20,000 BTC," he said.

"If you look at the volumes in each of these three bags – there were in sync, volume units of about 7,000 BTCs in an hour."

For a graph on the price of Bitcoin, see – tmsnrt.rs/2VadrPe

Analysts were not able to pinpoint any specific news or developments in the cryptomoeda sector that could explain the mysterious buyer's big request.

Outdated price movements of the kind rarely seen in traditional markets are common in crypto-markets, where liquidity is scarce and prices are highly opaque.

Thus, orders of great magnitude tend to stimulate the purchase of algorithmic traders, said Charlie Hayter, founder of the CryptoCompare industry website.

As bitcoin rose, there were 6 million transactions for one hour, Hayter said – three to four times the usual amount, with orders focused on Asian-based exchanges.

"You trigger other order books to catch up, and that creates a buying frenzy."

The increase in Bitcoin caused smaller crypto-coins, known as "altcoins", and traded higher. Ethereum ether and Ripple's XRP, respectively the second and third largest coins, jumped more than 10%.

Price movements of smaller currencies tend to be correlated to bitcoin, which still represents just over half the value of the crypto-coins market.

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"Normally, bitcoin is the market leader and the altcoins tend to follow in regards to direction and sentiment," said Mati Greenspan, an analyst at eToro in Israel. "Bitcoin is in the driver's seat today."

Cryptomoeda markets are relatively quiet so far this year, with bitcoins trading to this day between about $ 3,300 and $ 4,200.

There were few catalysts for major price movements of the type seen last year. By 2018, fears of regulatory restrictions and declining retail investor interest have seen the bitcoin fall in about three quarters.

Report of Tom Wilson and Tommy Reggiori Wilkes; Editing by Abhinav Ramnarayan and Andrew Cawthorne

Our standards:The Thomson Reuters Trust Principles.

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