Bitcoin price rockets above $7,700 on Bitfinex exchange in peculiar surge

The crytocurrency's value rose by more than $1,500 on the popular exchange, but everything is not at it seems

(Reuters)

The price of bitcoin has experienced dramatic gains on a major cryptocurrency exchange, rising by more than $1,500 on Bitfinex in the space of just a few hours.

The sudden surge from $6,294 to $7,788 represented a 24 per cent rise in value, though it was not reflected across other popular bitcoin exchanges.

Such a large price rise is instead being attributed to the exchange's use of tether – a cryptocurrency whose creators claim is pegged to the price of the US dollar on a 1:1 ratio.

On Bitfinex, traders are required to buy and sell cryptocurrencies like bitcoin and ethereum using tether, but over the weekend the so-called 'stablecoin' dropped in value to $0.97.

This drop in the price of tether therefore resulted in the premium price of other cryptocurrencies on the Hong Kong-based platform. Bitcoin's price has since fallen back down to around $6,880 – still $200 above the price listed on the CoinMarketCap price index.

The gains come less than a week after a shock collapse in prices across cryptocurrency markets, which was triggered by a major stock market sell-off.

Bitcoin, ethereum and ripple all saw significant losses, falling by between 7 and 12 percent on 11 October.

It was the latest in a series of losses since early 2018, during which time around $600 billion has been wiped from the value of cryptocurrencies.

"The last seven days was full of the usual volatility that we have become used to with bitcoin, however last week's plummeting price was interesting as it appeared to correlate with a worldwide drop in equity markets," David Thomas, director of Mayfair-based cryptocurrency broker GlobalBlock, said in a comment shared with The Independent.

Bitcoin's price crash preceded a market-wide meltdown for cryptocurrencies (Getty)

"The important thing though, is that fast forward five days from the move lower and bitcoin has already rebounded up and away from its low whereas equity markets continue to languish in the turmoil brought on from last week."

Despite the generally disappointing downward trend of the cryptocurrency markets in 2018, many experts remain optimistic that bitcoin and others can finish the year strongly.

Mr Thomas said in his analysis that "there is a chance that the end to the year is strong and the bull market resumes."