There was a large short covering rally that took place yesterday which helped boost prices, but what caused those shorts to cover?
Yesterday in a post I mentioned how there was likely a large short covering that took place which helped boost prices rather dramatically and did so rather quickly.
The post can be found here:
https://steemit.com/bitcoin/@jrcornel/curious-why-bitcoin-just-jumped-usd1-200-in-less-than-an-hour
That theory was supported by the fact that many margin short positions were indeed closed on Bitfinex.
However, what caused them to close their positions, what caused them to get margin called?
Yesterday there was a piece of news that seemed to fall through the cracks, a piece of news that just so happened to come out right around the same time that Bitcoin prices started to rally.
What piece of news might that be you might ask?
How about something like this?
"Bitcoin market suddenly opens to 1.6 billion Muslims as cryptocurrency declared halal under Islamic law."
According to the news release, an Islam scholar delcared that bitcoin is now permissibile under Sharia Law.
Which would mean that the bitcoin market would now be open to investments from potentially billions of Muslims around the world.
This announcement was released right around the same time that Bitcoin started to go on a major run.
(Source: http://cointhud.com/islamic-scholar-bitcoin-sharia-law/)
Could it be that the run was kick started by money flowing in from Muslim investors?
That also would jive with the narrative from Olga Feldmeier, the CEO of fintech startup Smart Valor.
He had this to say regarding the price surge:
"Many speculated that the sentiment around bitcoin was getting more positive, and that it may have been related to Sharia law compliance. Others assumed there was unwinding of a large short-selling position. I personally think that this rise was due to a large institutional investor.”
Could that large institutional investor have been a rich Muslim "allowed" to enter the cryptocurrency markets for the first time?
Due to the semi-anonymous nature of bitcoin transactions we can't know for sure, but the timing of the surge leads me to believe that this news likely sparked a short covering rally that may have also coincided with new money coming in due to the updated classification of bitcoin and cryptocurrency under Sharia Law.
Stay informed my friends.
Image Source:
https://bravenewcoin.com/news/sharia-law-and-bitcoins-fatwa/
Follow me: @jrcornel