Is Algorithmic Trading Resurrecting Bitcoin From The Dead?

Bitcoin is currently performing exceedingly well in the market. At press time, it is trading at $5,140.76. However, the cryptocurrency hadn’t been performing this well up until very recently.

This has got a lot of people wondering, why is the digital currency suddely performing so well?

According to Bloomberg, algorithmic trading could be the reason behind Bitcoin’s sudden resurgence. Now for those asking what exactly is algorithmic trading, it is a method that uses automated software to detect trends and determine when trades should be made.

This method has slowly gained popularity in the last few months, according to Bloomberg. There has been a recent wave of algo or quantitative funds, that have launched since September. An approximate number of 17 such funds are in existence presently.

The interesting thing to note here is that, while the market was going through a period of slump, crypto funds lost around 72 percent. However, these algo funds reported gains of between 3 percent and 10 percent per month, during the bearish market.

According to Bloomberg, there was a $100 million trade made on three major exchanges, which could have been the catalyst for the near 20 percent surge of BTC price on Tuesday, April 2. This happended shortly after the Asian markets opened.

Algo trading could possibly become the next big thing in the crypto industry. Wei Zhou, CFO of Malta-based crypto exchange Binance, believes that they are going to be the new rock stars of the industry.

Most experts are of the opinion that algo trading could have a positive impact on the crypto industry, while other are concerned about how it may facilitate market manipulation, which could affect a lot of people in the market.

Founder of the Los Angeles-based crypto hedge fund Ikigai, Travis Kling, had told Bloomberg that this could make way for fake orders, that could trigger market variations in prices and volumes.

Different people have different theories about why this sudden resurgence of Bitcoin, while some are just happy to sit back and enjoy the gains.