RATE Group | Short Covering Drives Surge in Price of Bitcoin
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Short Covering Drives Surge in Price of Bitcoin

22 Aug Short Covering Drives Surge in Price of Bitcoin

Posted at 11:49h in Bitcoin News by

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Bitcoin, the leading cryptocurrency, surged in trading overnight, with the digital token’s price increasing 5% in the course of a few minutes in what appears to be short covering.

With the price of bitcoin rallying in recent days, investors who bet the value will go lower with borrowed shares are forced to cover their positions if the reverse happens. That means purchasing bitcoin and sending the value higher. The number of shorts in bitcoin on the Bitfinex exchange is nearing an all-time high according to Timothy Tam, chief executive of cryptocurrency data research firm CoinFi, and that could be behind the surge, reported Bloomberg. “When there’s a record number of shorts, if there’s a large explosive price movement up like this, it means people will need to cover their shorts quite quickly,” Tam told Bloomberg in an interview. (See also: Crypto Market Caps Plummet on Bitcoin ETF Woes.)

Short Covering in Action

According to Bloomberg, around 9:00 a.m. Hong…

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