In line with a recent ‘report‘ published by Bloomberg, the recent cryptocurrency market jump might be associated to the algorithmic trading.
Algorithmic trading is a technique that uses automatic softwares to detect trends and verify when trades ought to be made – has been on the hike within the past few months, per Bloomberg. The industry has seen seventeen new algo or quantitative funds launched since earlier Sept., an amount that supposedly comprises around 40% of cryptocurrency hedge funds started during this time period.
While when cryptocurrency funds normally lost over 70% due to the 2018’s bearish market, these algo funds reported on gains of between 3% and 10% per month throughout the so-dubbed ongoing ‘crypto winter’.
Bloomberg added that Bitcoin’s [BTC] sudden 20% surge value earlier on 2nd April this year, shortly after the Asian markets opened, may have been provoked by a $100 Mln trade created on 3 major exchanges.
Experts ‘told‘ Reuters that a 20,000 Bitcoin [BTC] order [around $100 Mln at the reporting time] was spread across U.S.-based cryptocurrency exchanges Coinbase and Kraken along with Luxembourg’s Bitstamp. Triggered by the large order, the bots then might had begin trading, forcing the prices and volumes to rise.
Some entrepreneurs quoted by Bloomberg suppose that algo trading could have a positive impact on the crypto ecosystem. Wei Zhou, chief financial of Malta-based cryptocurrency exchange named ‘Binance’, added that they’re planning to be the new rock stars within the industry.
Mean while, others concerns are that algo trading can trigger market manipulation. Travis Kling, founding father of the Los Angeles-based crypto hedge fund named ‘Ikigai’, told Bloomberg that a number of them might use faux orders to trick the alternative traders.
Bloomberg has outlined a series of ‘articles‘ and ‘television spots‘ citing the doable reasons behind the visible market rising. For example, Bloomberg author Eric Lam ‘recalled‘ an April Fool’s Day story that ‘claimed‘ that the United States SEC [Securities and Exchange Commission] had finally approved a Bitcoin ETF [Exchange-Traded Fund] as presumably affecting the cryptocurrency markets.