Bitcoin is back over $9000 again. The price of Bitcoin has skyrocketed. It surged from $7500 to over $10000 within 24 hours. This was 42% gain which was the fourth largest gain percentage wise in the history of Bitcoin (if comparing against daily returns). The price has since settled around $9450. Major altcoins such as Ether, Litecoin, Bitcoin Cash has surged between 5% and 24%, adding billions to the value of the entire cryptocurrency market. The overall cryptocurrency market capitalization recover from $206 billion to $252 billion. Many attribute this price surge to several reasons. The first one is a statement by China’s President Xi Jinping with regard to blockchain technology. President Xi Jinping commented that the country should seize the opportunity of blockchain technology. The bullish sentiment in China proved to be a trigger for the rise in price. All Chinese altcoins such as NEO, Ontology, Tron, Qtum are still pumping up followed by the positive news. The news itself doesn’t provide much justification to the price action. As there is a difference between blockchain and Bitcoin. The blockchain use case for China is more towards corporate use case and tracking and recording data. China had previously made it clear that they don’t like Bitcoin and even banned Bitcoin.
Another reason that has driven the prices to go up has to do with Bitcoin futures market. Futures contract for Bitcoin on Chicago Mercantile Exchange (CME) has expired last week. Traders who think Bitcoin is overvalued expects Bitcoin price to drop. During this bear market many have predicted Bitcoin to fall further and took short positions. This means traders borrow Bitcoin and sell them on the market, planning to buy back when prices go down and profit from price drop. When Bitcoin price started to rise traders bought back Bitcoin to minimize their loss, which is called short squeeze. Bitcoin short squeeze effect on futures market might pushed the prices even higher as even those who bet that Bitcoin price to fall bought Bitcoins too.