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Bitcoin Prices Jump

On Tuesday, the price of Bitcoin shot up above $5,000 per coin.  Speculation swirled on what could have caused the jump.  

According to Reuters, the catalyst behind the rise in the Bitcoin price was a single buyer, placing orders across a trio of crypto exchanges (Bitstamp/Coinbase/Kraken).  BCB Group’s Oliver von Landsberg-Sadie:

“There has been a single order that has been algorithmically-managed across these three venues, of around 20,000 BTC. If you look at the volumes on each of those three exchanges – there were in-concert, synchronized, units of volume of around 7,000 BTC in an hour.”

The rise to above $5,000 for each BTC (Bitcoin) suggests the question of whether we’ve entered a new period of Bitcoin growth.
Through April 3rd, Bitcoin is up more than 20%, a healthy return compared to most any other financial asset.  

The question, of course, for every Bitcoin investor is whether we’ve entered a new era of Bitcoin support, with the price to stay above $5,000 for the foreseeable future.

Bitcoin’s Life Experience
Let’s take a look at the price experience of Bitcoin over its life to date.  This view follows.

The first period of Bitcoin era could be called the lazy, discovery phase.  This is the period when the price of Bitcoin barely moved.  The period, highlighted in the gray area of the following chart, lasted from 2009 (Bitcoin inception) to around the end of October 2013. 

The next phase, in light purple, covers the period from November 2013 to around middle of October 2015.  This period is labeled the What is this – Bitcoin? period. Over this time frame, investors and currency speculators were trying to figure out what Bitcoin was.  Is it something real?  Is it just some guy’s pipe dream?

The third period, highlighted by the light blue area, covers the period from middle October 2015 to the end of March 2017.  In this period the price of Bitcoin steadily rose, thus being labeled This might be real.

The fourth phase is the euphoria phase.  During this time, Bitcoin demand went astronomically high.  The price of Bitcoin reached almost $20,000 per BTC.  Amazing.

The euphoria phase was followed by the massive letdown phase.  Bitcoin went from almost $20,000 BTC to a low of $3,271.  The letdown phase ended in middle December 2018.

We’re now in the this thing is here to stay phase. That appears to be what was behind the recent purchase of $100 million in Bitcoin. Bitcoin is a viable alternative to central banking’s control of the globe’s money. Bitcoin can be used to purchase virtually anything.  In a few words – Bitcoin is here to stay.  

Conclusion
On Tuesday, Bitcoin briefly shot up to over $5,000 per BTC.  Because Bitcoin is private to most anyone (government spy agencies excluded), speculators can only guess what caused the giant rise in the price.

One suggestion was that the price rose because of a coordinated purchase order of $100 million across three exchanges.  The orders wiped out the order books of the three relevant exchanges at $4,200.

Presuming this is true, what has to wonder whether Bitcoin has entered a new era of price appreciation.  It appears that the answer is yes, although no one really knows until after-the-fact.