A huge price spike has ignited the crypto currency markets with BTC and ETH among the big beneficiaries.
I don't know what the cause was but crypto exploded upwards overnight.
At the time of writing Bitcoin prices surged nearly 15% and Ether by nearly 20%. The other DeFi tokens also got a kick along although I am still behind on most of them.
As a long term investor I don't get too carried away with these explosive moves because what causes joy on the upside eventually brings sadness when it flips. Far better to remain unemotional and stick to the plan.
That plan is to continue to dollar cost average into the two 'biggies' while having appropriately small bets on the DeFi tokens hoping that at least one of them is a roaring success.
One crypto news platform has suggested that the cause for the jump in prices is due to speculation that Amazon has plans to accept Bitcoin payments later this year.
London based newspaper City AM quoted an Amazon insider who said:
“This isn’t just going through the motions to set up cryptocurrency payment solutions at some point in the future – this is a full-on, well-discussed, integral part of the future mechanism of how Amazon will work.”
If true, this is big news. Amazon is the world's largest online retailer by market capitalisation and where they lead others will surely follow.
The price jump is now being attributed to a massive short squeeze. This is where traders who have borrowed money to sell short BTC, expecting the price to go down, are being forced to cover their sales by purchasing.
The chart below shows the account closure of margin traders have suffered over $950 million in liquidations. A lesson why I say never to use leverage with crypto!
Should mention that Amazon have denied the City AM reports of a BTC or cryptocurrency plan for 2021