The cryptocurrency market cap briefly clipped the $300 billion mark on Thursday, a phenomenon that occurred as the result of an apparent bear trap in the Bitcoin futures markets.
Fueled by a dramatic Bitcoin price rally, the cryptocurrency market cap surged by more than $30 billion, peaking at $301.8 billion before settling back down to a present value of $298 billion. This represents a single-day increase of 12 percent, one of the market’s largest intraday rallies since December.
The Bitcoin price led the rally, surging more than $1,000 in less than an hour and briefly surmounting the $8,000 checkpoint. At present, Bitcoin is trading at $7,740 on Bitfinex — a 24-hour gain of 11 percent — and has a market cap of just under $130 billion.
Analysts largely attributed the precipitous surge to a “bear trap ,” which occurs when futures and margin traders attempt to short an asset but have their positions liquidated due to a price increase, forcing them to buy at market prices to cover their position.
Matthew Newton, an analyst at crypto brokerage eToro told CCN.com:
“Whilst there has been some stability in the cryptocurrency markets over recent weeks, we’ve seen a record number of short positions building on major exchanges. When the price began to rise this afternoon, a large number of shorts with big positions were squeezed. The resulting interest from buyers increased momentum, causing the price to jump $1000 in 30 minutes.”
“The ratio of short margin trades versus longs has been increasing recently,” Nick Kirk, quantitative developer and data scientist at Cypher Capital, told CNBC . “Buying volume ticked up today and a lot of these short trades got liquidated, helping fuel the rally.”
The Bitcoin bear trap rippled throughout the market, and most — though not all — altcoins made significant gains against the US dollar. The Ethereum price, for instance, rose 10 percent on Bitfinex and is currently trading at $463. Ethereum now has a $45.5 billion market cap.
The vast majority of altcoins posted similar rallies, though the gains were far from evenly distributed and one large-cap altcoin — sixth-ranked Litecoin — trailed the index by a considerable margin.
The Ripple price made an 11 percent leap to $0.55, raising the third-largest cryptocurrency’s market cap to $21.5 billion. Bitcoin Cash, meanwhile, trailed the index by three percent but still managed to surpass the $700 mark.
EOS, continuing its parabolic midweek rally, is up 31 percent for the day, bringing its price to $8.96 and market cap to $7.1 billion.
Litecoin posted the worst performance among top 10-cryptocurrencies, rising just six percent to $121, while seventh-ranked Cardano climbed by 23 percent.
Stellar and NEO rose 11 percent and 12 percent, respectively, while IOTA’s 14 percent rally to $1.18 rounded out the top 10.
Featured image from Shutterstock.