In the last month, after a long time, the value of Bitcoin went on an increasing trend and went from $4000 margin to $5000 margin. However, what is the reason for this sudden increase?
The reputable news agency, Bloomberg, believes that the recent sharp increases in the crypto market can have a direct connection with algorithmic trades that took place during this time.
Algorithmic trade is a method in which by using automatic software, market trends are identified and the right time for trades is determined.
According to statistics offered by Bloomberg, this method has gained a lot of fans during this time. This can be clearly seen where given the statistics, 17 new models or quantitative funds have been created by this method since last September. This number equals to 40 percent of all investing funds in the field of cryptocurrency that have begun work during this time.
In a situation where companies in the crypto field completely lost 72 percent of their stocks in the bear market of 2018, the companies that used algorithmic trades were able to have a 3 to 10 percent growth in a month in the hard winter of the crypto market.
The Increase in Bitcoin Price Is Probably Related to the Increase in Asian Market Trades
Bloomberg also says that the sudden 20 percent increase in Bitcoin price in the month of April that occurred after the reopening of the Asian market, can be the result of incentives created by the trades that have taken place in three main stock market worth $100 million.
One of the experts in this field has told the Reuters news agency that 20,000 Bitcoins with the approximate worth of $100 million were distributed in the stock markets related to U.S. cryptocurrency including CoinBase and Kraken like Bitstamp in Luxemburg.
According to some of the entrepreneurs active in this field, the use of algorithmic trades has had a positive impact on the crypto market. Wei Zhou, the financial manager at Binance located in the county of Malta, believes that this method will soon turn into a new investing star in this field.
However, from the other hand, there are worries about the possibility of manipulation in the stock market by these models in a way that it is possible that the existence of these models in the market lead to another mistake by buyers who do not use these models. In authenticating these claims, it can be referred to this fact that in some reports it is mentioned that in some cases up to 90 percent of trade volume in the crypto field has been unreal.
Also, Bloomberg claims that another reason that has created this positive trend in the Bitcoin price is the delaying of Brexit in which British stockholders are changing their pounds into Bitcoin so that if the value of pound decreases after Britain exits the European Union, they would not be met with losses.