The price of a single bitcoin briefly crossed $10,000 yesterday as details emerged about a mysterious buyer’s bet on the cryptocurrency. (See also: Bitcoin Price Topped $10,000 Amid Cryptocurrency Rally.)
According to a tweet, a bitcoin address bought almost $1 billion worth of bitcoin during a dip in its prices recently. The buyer first bought bitcoin worth $344 million between February 9th and February 12th, when its price traversed the range between $8,500 and $8,900. The buyer doubled down on bitcoin by purchasing 41,000 coins, just before its price hit $10,000.
The tweet will provide further ammunition to critics of the cryptocurrency. In the past, detractors have noted that despite bitcoin’s claims of being decentralized, its price is susceptible to being manipulated by "bitcoin whales," or investors and traders who hold large stashes of the virtual currency.
Meanwhile, noted cryptocurrency analyst Tom Lee, who has a $25,000 price target for bitcoin by the end of this year, has predicted a bump in its prices starting in July.
“In general, we see 2018 being a strong year but we see the larger and more established blockchains growing in dominance in 2018 – hence better upside for ETH and BTC over the FS CryptoFX indices,” he wrote.
Among the top 10 most-traded cryptocurrencies, bitcoin cash was the biggest gainer and moved up by 11.32% from its price 24 hours ago. After rallying for two days, crypto markets mostly moved sideways this morning. At 15:11 UTC, they had a total market cap of $481 billion, up from $468 billion earlier this morning.
Bitcoin’s Correlation With Other Cryptocurrencies
As the original cryptocurrency, bitcoin’s price has mostly correlated with other coins. Or so it is assumed. According to analysis by Bloomberg, bitcoin’s price correlation with other cryptos “broke down” when it rallied. But a fall in crypto prices re-established the lockstep movement.
In quantitative terms, bitcoin’s price had a correlation of 0.57 with other cryptocurrencies when prices tumbled. When they rose, it declined to 0.19. A correlation of 1 translates to synchronous movements. This is interesting analysis for traders interested in diversifying their funds away from bitcoin towards other coins. (See also: Cryptocurrency Exchange Coinbase Accused of Overcharging Users.)
Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns small amounts of bitcoin.