"Blockchain asset traders with extensive experience in more traditional financial markets are likely to be wary of the recent bitcoin price surge and instead of cashing out into fiat currencies, that may be equally volatile this year, are heading to alternative blockchain assets."
But bitcoin â the largest cryptocurrency â has also boosted interest in alternative digital assets. Ether â the second-largest cryptocurrency by market capitalization â has seen its price increase around 55 percent from December 28 to January 5. Monero, another digital currency, is up 27 percent in the same period.
"The bitcoin price surge is enabling traders in this space, who tend to be bitcoin heavy, to diversify their blockchain asset portfolios, and allocate greater weight to other cryptocurrencies such as ether, which until recently have been relatively undervalued," AurÃ©lien Menant, founder and CEO of Gatecoin, told CNBC by email.
A number of factors highlighted previously by CNBC have contributed to the recent rally in bitcoin which rose nearly 130 percent in 2016. Bitcoin has benefited as a safe-haven as China imposes currency controls and the yuan devalues. Geopolitical uncertainty as well as professional investors taking an interest in the asset class have also helped bitcoin's popularity. Fears of capital controls in China â the biggest market for bitcoin â have also contributed to support for the virtual currency.
The story is the same for many of the other alternative coins or "alt coins" as they are known in the industry. Experts said that the bitcoin rise has given investors confidence in these other currencies.
Another big event this year was in June when a change in bitcoin's underlying rules meant those who were "mining" the cryptocurrency â a process whereby users are awarded with a bitcoin if they solve complex mathematical puzzles in order for a bitcoin transaction to go through â received less rewards. This was due to the process known as "halving," which essentially reduces the supply of bitcoin.
"A lot has happened in the time between the all-time high in 2013 and now. The industry has grown a lot and become stronger, through innovation, and endurance. Additionally, the adoption and popularity of Bitcoin are much higher than they were back then. More and more people are beginning to recognize the benefits and value of the currency," said Marco Streng, CEO of Genesis Mining, a bitcoin mining start-up.
The largest digital currency by market cap (currently around $17.5 billion) was trading around $1,1090 at the time of publication, not far off the record high of $1,165.89 set on November 30, 2013, according to CoinDesk data. Bitcoin did trade as high as $1,153.02 earlier in the day before paring some gains in what has been a volatile day of trade.
Bitcoin moved to within touching distance of its all-time high on Thursday with the recent rally in prices also supporting a rise in alternative cryptocurrencies.
The Code for Ethereum's Consensus Change Is Now Ready for Review
New code written to change the way the ethereum network reaches consensus is now ready for review, developers said Friday.
Ethereum improvement proposal (EIP) 1011, known as Hybrid Casper FFG (shor
$10K Test? Bitcoin Price Hits 4-Week High As Altcoins Shine
Bitcoin hit four-week highs in Asian hours but continues to underperform when compared to alternative cryptocurrencies (altcoins).
Having scaled a long-term bearish trendline, the world's largest c
DOJ Charges ICO Co-Founder With Securities Fraud
The Department of Justice has unveiled fraud charges against another co-founder of cryptocurrency startup Centra, a move that comes weeks after two other founders were arrested and charged.
Russia's Supreme Court Orders Review of Crypto Website Ban
The Supreme Court of Russia has directed a court in the city of St. Petersburg to consider an appeal against a blocked cryptocurrency information website.
According to Russian legal information sit
Quebec's Chief Scientist Denies Dismissing Crypto Concerns
Contrary to recent media reports, the Chief Scientist of Quebec has not downplayed concerns about the illicit use of cryptocurrencies, his office said.
On Thursday, several media organizations publ
Amazon Web Services launches 'blockchain templates'
Amazon.com wants to make it easier for developers to create projects based on the blockchain technology underlying bitcoin and other cryptocurrencies. The company's cloud computing division
Cloud Giant Xunlei Claims Blockchain Advance With 'ThunderChain'
Xunlei, the NASDAQ-listed cloud network provider, has launched its proprietary blockchain platform, despite ongoing class actions over an alleged initial coin offering (ICO).
At a press event in Be
Taiwan Eyes November Deadline for Bitcoin AML Regulation
Taiwan aims to formally regulate bitcoin under anti-money laundering (AML) rules before the end of the year.
According to the Taiwan Central News Agency, Chiu Tai-san, the country's minister of jus