Bitcoin prices rallied today, approaching $7,000 and reaching their highest in a month after markets responded to concerns about tether.
The value of bitcoin rose to $6,960.98 today on the CoinDesk Bitcoin Price Index (BPI), its highest since Sept. 5.
At this point, the digital currency had climbed more than 10% in the last 24 hours and was trading close to a six-week high.
This spike contrasted notably bitcoin’s recent malaise, as the cryptocurrency’s volatility fell to its lowest point of 2018 earlier this month.
[Ed. note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Bitcoin prices surged earlier today, pushing higher after markets responded to a sell-off in tether, a U.S. dollar-based digital currency.
At the time of this writing, all of the top 10 cryptocurrencies listed on CoinMarketCap were up over the last 24 hours, with the exception of tether.
Traders frequently leverage tether as a means of buying other digital currencies, and a decline in tether prices would likely point to these market participants fleeing the stablecoin.
One exchange in particular that felt the impact of this sell-off in tether was Bitfinex, where the bitcoin price premium reached an all-time high of more than 11%, according to CryptoGlobe.
This premium helps show how much tether is affecting bitcoin, said Marouane Garcon, managing director of crypto-to-crypto derivatives platform Amulet.
“People have to get out of Tether and they’re most likely doing it through Bitcoin,” he stated. “That’s the most liquid Tether pairing.”
The rise in bitcoin prices triggered Fear Of Missing Out (FOMO), motivating traders to pile in to the digital currency, said analysts.
“The rise certainly triggered momentum buying,” stated Charles Hayter, cofounder and CEO of digital currency data platform CryptoCompare.
Garcon offered a similar point of view.
“I think people are slowly starting to realize that Bitcoin is still the most reliable thing to be invested in,” he stated.
“If Tether continues to spiral then people are expecting Bitcoin to rally and no one wants to miss out on a Bitcoin rally after January.”
Building Strong Support
While bitcoin may enjoy strong price gains going forward, one thing is certain: the digital currency has been building up support at $6,000. Having remained above this level for roughly two months, the cryptocurrency has established a strong floor, stated Jon Pearlstone, publisher of the newsletter CryptoPatterns.
“Bitcoin had a high volume retest of the $6000 level last Thursday, but there was no follow through to break down below $6000,” he stated.
“Add to this strength the questions about Tether and that created a strong high volume move into Bitcoin.”
Elaborating, he stated that:
“After testing resistance around $7000 price is now consolidating around $6450 which has been a key level throughout 2018.”
“While the Tether scare may have motivated the current spike, staying above $6000 continues to be good news for bulls and could lead to higher prices.”
Disclosure: I own some bitcoin, bitcoin cash and ether.