I’ll admit it. When I woke up in the middle of the night last week to a flurry of notifications that Bitcoin had surged 23%, to over $5,000, in a matter of an hour, I was skeptical.
I scanned Twitter. The first thing I saw was a tweet from the CEO of one of the world’s largest crypto exchanges, Binance, proclaiming himself “honestly clueless.” CZ, who was arguably in the best position to know what was going on, asked his followers, “Anyone know any news?”
The next thing I noticed: An account, @BTCWonderland, noting that there was a “rumour spreading on Chinese social media” that “the SEC is going to pass Bitcoin ETF.”
In that tweet, which featured a screenshot of a WeChat discussion (translated by my colleague Lucinda Shen), someone named Aaron says, “Just received the newest reliable news. The U.S. SEC has just approved a Bitcoin ETF [clapping face emojis]…Last month I just added more leverage to buy up BTC (victory signs). This is freaking perfect timing.”
I did another search, and quickly came across a tweet of an obviously fake screenshot impersonating the official account of the U.S. Securities and Exchange Commission. “Our Office of Compliance and Examinations has approved one of two Bitcoin ETF applications,” the fake tweet read—as if the SEC actually tweeted clickbait-style blind items (click to find out which one it approved!). Similar fake tweets were showing up on Facebook.
I checked the time. It was still April Fool’s day on the West Coast—though in China, where rumors were apparently spreading, it was well into the afternoon of April 2nd. Was it possible this rally was just the result of a joke, lost in translation? There was even an actual joke article spreading quickly across social media, headlined, “SEC Drops the Bomb: Approves Bitcoin ETFs.” Although the article was labeled as a joke, that didn’t stop some international blogs from picking it up as news.
Of course, if Bitcoin buyers were bidding up the price based on a misunderstanding, then the price should just as quickly deflate. That didn’t happen. While Bitcoin initially gave back some of its gains, it’s currently bouncing up again, topping $5,300 earlier today and now hovering just below that level. That’s more than $1,000 above where Bitcoin traded last Monday.
And still, no one can really put their finger on what’s driving this rally. Chris Burniske, a partner at the venture capital firm Placeholder whose book Cryptoassets applies economic principles to cryptocurrency, told me he had “little insight beyond massive buys in Asia” on the first night in April, which may have set off a chain reaction. Reuters reported there was a $100 million Bitcoin order that came in overnight. Other analysts read meaning into technical thresholds the Bitcoin price had surpassed, which might convince some investors to buy. Some observed that Google searches for Bitcoin had spiked around the same time—but it wasn’t clear if the searches were just a reaction to the rally itself, with people looking for a cause of the surge.
In the meantime, several top investors seem to be waiting and watching to see if this rally is the real deal before buying in. For now, Lewis Fellas, chief investment officer of Bletchley Park Asset Management, a U.K.-based crypto hedge fund, says he’s “also skeptical.” If this does turn out to be a sustained leg up in the Bitcoin price, it could mean the joke’s on us, the skeptics who sat on the sidelines. But for the many who bought into the last big rally in late 2017, only to lose their investments last year, some caution might pay off.
HAMPTONS, HERE WE COME
We’re now just a little more than two months out from Fortune’s inaugural Brainstorm Finance conference in Montauk, N.Y., which The Ledger team is co-chairing. Our stellar lineup just keeps growing, and now includes CEOs including Circle’s Jeremy Allaire, Mastercard’s Ajay Banga, Western Union’s Hikmet Ersek, Clovyr’s Amber Baldet, and many more. You can apply to attend here, or join us via the livestream in June.