Bitcoin in bull market frenzy
Bitcoin’s value has soared to about $12,600 (£9,934), more than triple its value at the end of March. It’s now up 230 per cent since the start of the year.
The cryptocurrency appears on track to pass its previous record price of $20,000, which it hit in late 2017. Experts say the price surge over the past week is reminiscent of the bull market frenzy observed in December 2017.
The rally means the ratio of Bitcoin’s price to the 200-day price average – known as the “Mayer multiple” – reached a high of 2.42, a level which was last seen in early January 2018.
The Mayer multiple quantifies the spread between the price and the 200-day price average. A ratio above one indicates Bitcoin is in bull market territory, while a ratio below one implies a bear market.
However, Coindesk warned that “the hourly chart is flashing signs of buyer exhaustion”, and said a correction to $11,000 cannot be ruled out.
Cryptocurrency experts haven’t been able to explain the dramatic rise in Bitcoin’s price, although some have pointed to Facebook’s recent announcement about its own cryptocurrency Libra. With major companies such as Visa, Mastercard, Uber and PayPal getting involved in the crypto space by investing in Libra, the sector has gained validation.
Other theories surrounding Bitcoin’s price surge is that it’s being viewed as a hedge amid ongoing US-China trade uncertainty, and that traders are anticipating a “halving” event next year – when the rewards paid to Bitcoin miners are cut in half.
Bitcoin lost almost 70 per cent of its value during 2018 with other cryptocurrencies also falling sharply.