After trading sideways within a fairly tight range for the first part of April 2018, the price of bitcoin suddenly shot up on April 12. It started with a fairly abrupt fall from $6900 to $6750 around 7.45 AM GMT and slowly recovered back to $6900 by noon. Some traders that look for significant price movements will have picked up on the sharp downtrend and bought bitcoin in the hope that it would recover quickly. At $6750 it could have declined further as many bears have been predicting sub $5,000 since it started its bear run at the end of 2017.
As soon as it had recovered to $6900, it surged upwards, and within 25 minutes it had gained 16%, up to $8,000, before settling at $7,700. Even for bitcoin a gain of 16%, in such a short time, is quite rare in 2018. Heavy falls are a little more common as bad vibes from the G20, or an Asian regulator can move the market down rapidly.
What caused the market price to rise so rapidly?
When tension mounted between the USA and North Korea in 2017, the bitcoin price moved up, and the threat of a military response to the use of chemical weapons in Syria could be part of the reason for the upswing.
News of wealthy families like Soros, Rockefeller, and Rothschild moving into cryptocurrencies could also be pushing up the price. Even though some people disagree with the way these families accumulate wealth, they are still regarded as some of the wisest investors around. If they are moving into crypto, they are sure to attract other investors.
Trading bots are responsible for most of the buying and selling on cryptocurrency exchanges, and it could have been an anomaly in one of the algorithms that caused the frenzied buying of bitcoin. Another possible reason for the price hike could have been the publication of a research paper about Shariah law and cryptocurrencies. Senior Muslim clerics generally have damned bitcoin since it boomed in 2017, and in March 2018, two Imams in Turkey were dismissed for reportedly owning bitcoin.
An Indonesian company, Blossom Finance, published a 21 page PDF in April 2018 entitled “Shariah Analysis of Bitcoin, Cryptocurrency, & Blockchain.” The conclusion is that in jurisdictions where cryptocurrency is not prohibited, it is acceptable under Shariah. One of Shariah’s primary objectives is “preservation and protection of wealth,” and therefore Muslims should be aware of the associated risks when dealing with cryptocurrencies. With 50 countries being predominantly Muslim and a worldwide population of more than 1.6 billion, the market for bitcoin has grown substantially following the release of the document.
Financial analyst, smartphone app designer, technical writer, and crypto enthusiast. Blockchain verified graduate of MOOC 9, DFIN-511: Introduction to Digital Currencies, run by the University of Nicosia.