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.)

According to crypto coin news site CCN, analysts attributed the jump in the price of the virtual currency to the temporary downtime of crypto exchange BitMEX. "As investors could not log into BitMEX and alter their trade orders, analysts stated that bitcoin short contracts, which achieved a new monthly high on August 21, were liquidated, pushing the price of bitcoin up 4 percent," noted the crypto-focused website.

Short Covering in Action

According to Bloomberg, around 9:00 a.m. Hong Kong time Wednesday the price of bitcoin jumped to $6,840 from $6,465 with the move higher taking around seven minutes. By around 11:00 a.m. it was valued at $6,710, which Bloomberg noted is close to a two-week high. Still, bitcoin is 53% lower than where it started the year.  

Bitcoin Short Interest Growing Since August Start

As of Aug. 15, the outstanding short interest on bitcoin was at more than 36,000 BTC on the Bitfinex exchange. On Aug. 1 it was at 18,000 BTC, reported MarketWatch. The increases in negative bets against bitcoin came amid a broad sell-off in cryptocurrencies in the earlier part of August as concerns rose that entrepreneurs were cashing out their initial coin offerings and that some digital tokens including bitcoin may have become overvalued. (See more: Bets Against Bitcoin Grow Since Start of August.)

Those declines in August followed a rally in July as investors bet a bitcoin exchange-traded fund (ETF) would receive regulatory approval in the U.S., but regulators withheld approval for now. More recently, cryptocurrencies have been surging as some argue the bloodletting is behind the digital token market. Chris Yoo, portfolio manager at crypto-only investment firm Black Square Capital, recently told MarketWatch he thinks the cryptocurrency market is near the end of the bearish sentiment. “Most importantly, the ecosystem will continue to develop and grow from the increase in talent and public awareness, leading to the recovery of the market in the near future,” he said.