Bitcoin prices have seen a sudden jump in the last month. The virtual currency has more than doubled its value since January and seen a surge of more than 70 percent in the last month.
After hovering close to the $240 mark for the majority of the year, the average price of Bitcoin reached almost $500. The price surge remains a mystery for financial experts who follow Bitcoin. At the beginning of the year, the currency had dipped well below $200, but on Tuesday afternoon, Bitcoin was being traded at $410, and the upswing was quite evident.
While $410 may be only 25 percent higher than the same time last year and well below the historical high of about $1,150, the upsurge in the value has been sudden but consistent in the past few weeks. Experts can only speculate about the reasons why Bitcoin prices are jumping. However, about a month back, the virtual currency was greeted with a stream of good news. Apparently, the digital asset and its associated ecosystem were being slowly accepted, and the negative vibe associated with the currency was being wiped clean.
Supported by favorable regulatory rulings, positive press coverage, and medium-to-large scale investments, Bitcoin was seen as a viable investment option. The January launch of U.S.-regulated Bitcoin exchanged Gemini by the Winklevoss twins could be yet another positive piece of information. Moreover, Australia recently took some major steps to recognize Bitcoin as a currency and the top EU court declared Bitcoin transactions tax-free, boosting the adoption of the virtual currency. This, combined with China’s tightening of capital controls, made Bitcoin a highly attractive haven for storing value.
But none of the good news still justifies the 70 percent jump in the value of Bitcoin within a single month. According to CNBC, some experts feel the recent jump is due to commonly observed phenomenon called “Fear of Missing Out,” or FOMO. The phenomenon propels many investors to start accumulating shares or, in this case, Bitcoins at multiple price-points. Others speculate investors might have felt the currency has hit rock-bottom and the only way it can go is up, shared Brendan O’Connor, the CEO of bitcoin trading firm Genesis Global Trading.
“When the price starts going up, people start coming out of the woodwork. We’re setting new records almost on a daily basis for amount traded and number of transactions.”
Most Bitcoin exchanges have the price above $490, according to Bitcoin tracking site CoinDesk. But, for a brief period, Bitcoin had crossed the $500 mark, reported Mashable. In fact, the currency jumped 30 percent within the last day.
Apart from the jump in the price, even the volume of Bitcoins traded has jumped recently. BitStamp exchange reported over 70,000 Bitcoins being traded on Tuesday. Earlier, around 20,000 was the usual volume.
Bitcoin first appeared on the world’s financial radar by surging well past the $1,000 mark within a very short span of time, and then it crashed even quicker. For several months, it hovered around the $500 mark before plunging further. The crash came after one of the largest Bitcoin exchanges, Mt. Gox, shut down under highly suspicious circumstances and its CEO hauled up on criminal charges. Though the exchange did manage to find some “lost” Bitcoins later, the damage was already done.
Many financial experts have routinely cautioned that the sudden jump in Bitcoin value is by no means a reliable indicator of the currency’s true valuation. Despite being one of the most secure types of currencies that aren’t tied to any particular commodity, Bitcoin still remains a choice for a few tech-savvy investors. Others caution that Bitcoin shouldn’t be viewed from a short-term perspective.
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