By BLOOMBERG

HONG KONG • Bitcoin climbed suddenly yesterday to the highest level since November, leading a surge in virtual currencies and ending three months of calm in the US$160 billion (RM652.8 billion) market.

Traders struggled to pinpoint reasons for the rally, which briefly propelled bitcoin above US$5,000 and increased the value of digital assets tracked by CoinMarket-Cap.com by about US$17 billion in less than an hour.

The biggest virtual currency was trading at US$4,718.39 as of 9:38am in London yesterday, up 14% for the day, according to Bloomberg composite pricing.

Rival coins ether, XRP and lite coin also jumped, as did cryptocurrency-linked stocks including Remix point Inc and CMC Markets plc.

While sudden swings in bitcoin are nothing new, price action in the virtual currency has been relatively subdued this year as investors weighed the prospects for mainstream adoption after last year’s 74% crash.

Market participants said big buy orders in bitcoin can often lead to outsized moves, in part because volume is spread across dozens of venues. Trend-following individual investors and short covering can also exacerbate volatility.

“The bitcoin market and crypto market in general continues to be small relative to the rest of the markets — and emotional,” said Jehan Chu, managing partner at blockchain investment and advisory firm Kenetic Capital. “It’s still very much subject to waves of enthusiasm.”

George Harrap, CEO at Bitspark, said he’s putting “most things on pause” until the market settles down.

His contacts in the bitcoin community have yet to identify a catalyst for the sudden jump. “The reason why? It’s anybody’s guess at the moment.”

Among potential triggers discussed on trading desks and in social media — short covering by traders who had stop-loss orders around the US$4,200 level and an April Fool’s Day story on a little-known online news site claiming that the US Securit es and Exchange Commission had approved bitcoin exchange-t raded funds.

“Bitcoin is still primarily retail-led,” said Craig Erlam, senior market analyst at Oanda Corp in London. “It’s still a relatively unsophisticated area of trading.”

The cryptocurrency’s susceptibility to wild price swings has made it popular among speculators, who are eager for a return to the glory days of 2017 when bitcoin surged more than 1,400%.

Yet, extreme volatility is also one reason why the virtual currency has failed to catch on as a global medium of exchange, as intended by its pseudonymous creator.

Erratic moves have also deterred institutional investors, whose concerns about cryptocurrencies range from uncertain regulation to exchange hacks and market manipulation. — Bloomberg