Bitcoin spiked suddenly to a four-month high on Tuesday as investors betting against the cryptocurrency rushed to cover their positions.
The currency collapsed in price last year as the bubble burst after peaking near $20,000 in December 2017.
But bitcoin has made steady gains of 25% this year and suddenly soared as high as $5078 at one stage in trading.
Analysts said major short positions were closed after the currency pushed through the technical level of $4200 and broke the bearish trend in place since January 2018.
That forced the price higher as traders hurriedly bought back the currency. David Thomas at cryptobroker Global Block said: “There was a large volume of stops on short positions at $4200.”
Shares in spreadbetting firms Plus500 and CMC Markets also gained ground amid hopes that the surge could suck in more retail investors.
Thomas added: “Some analysts are predicting $5500 could be on the cards in the coming week although a short term pull back should not be discounted.”
