Bitcoin surged more than 17 percent in a sudden move on Thursday to above $8,000 at one point, according to trading on Coinbase.
The cryptocurrency hit a high of $8,011 on Coinbase.
Trading was volatile and it was 11.5 percent higher near $7,645 as of 8:19 a.m. ET, according to Coinbase. Bitcoin leaped from a low of $6,786 Thursday morning and some traders are watching whether it can hold above $7,500.
"Once [bitcoin] broke higher, shorts were squeezed and forced to cover," said Brian Kelly, CNBC contributor and head of BKCM, which runs a digital assets strategy for clients.
A sudden jump in bitcoin prices forces traders who had bet against the cryptocurrency to buy back into the market.
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"The ratio of short margin trades versus longs has been increasing recently," said Nick Kirk, quantitative developer and data scientist at Cypher Capital, a cryptocurrency trading firm. "Buying volume ticked up today and a lot of these short trades got liquidated, helping fuel the rally."
Bitcoin had been suffering from tax-related selling in the run-up to the U.S. tax deadline on April 17. Some traders indicated Thursday's move could be an unwinding of that pressure.
Bitcoin has treaded water in April after dropping below $7,000 at the end of last month. It surged above $19,000 in December.