Cryptocurrencies are infamously volatile, at times posting double-digit gains and losing just as much moments later. In April, for instance, the largest cryptocurrency jumped 21% on the back of an internet hoax. In May, peak excitement over Bitcoin pushed its price up 17% in one session, just days after a flash crash. A similar pattern played out again in August when Bitcoin suddenly dropped for no apparent reason, leaving traders and speculators guessing about catalysts behind the move.
Wednesday’s move, which saw Bitcoin gain as much as 6% before paring losses, may have been caused by a large Tether deposit on an exchange, said Danny Kim, head of growth at SFOX. “Given this data is publicly available, other market participants could have been expecting there would be a big purchase coming and tried to get ahead of the run, thus creating a short-term price increase,” he said.
Bitcoin was up 2% as of 12:46 p.m. in New York to trade around $7,479. The Bloomberg Galaxy Crypto Index, which tracks some of the largest digital tokens, gained as much as 4.1%.