Correction: Article has been updated to reflect that one-year high is based on BPI closing prices; 36% gain was achieved in last two weeks, not last four days.
The price of bitcoin has hit its highest closing price in the last year, trading at $436 and climbing at press time, according to the CoinDesk Bitcoin Price Index.
Bitcoin has gained an astonishing $115 or 36% over the last two weeks. It was changing hands for $320 a coin on 25th November. The price briefly touched $500 on some exchanges on 4th November before dropping under $400 in the following days.
The strong rally is accompanied by record-breaking trading volumes on bitcoin exchanges. On 5th December 3.49 million bitcoins were traded across all exchanges tracked by data provider Bitcoinity. This smashed the previous record for daily traded volume established just days prior, on 26th November, of 2.86 million coins traded.
Trading volume has remained robust since its high watermark, with daily trading consistently closing above the 2 million BTC level.
Market-watchers offered theories ranging from the falling price of the yuan, to the media hoopla around a supposed unmasking of Satoshi Nakamoto by two prominent technology publications, to an abundance of positive newsflow around the blocksize debate.
Daniel Masters, who runs the Global Advisors Bitcoin Investment fund that is widely known as GABI, said a weaker yuan was driving Chinese investors into bitcoin. The yuan has fallen 4% against the US dollar this year. He told CoinDesk:
"It's pretty simple in my view ... A domestic Chinese investor is faced with falling yuan, falling commodity prices and falling real estate prices. One of the few alternatives is bitcoin, which is negatively correlated to all of this."
Indeed, the exchanges with the most volume traded were the ones based in the mainland, with OKCoin and Huobi leading the way. Observers have previously noted that exchange volume figures, which are self reported, should be treated with caution because they can be manipulated.
Masters said China will continue to be a major factor driving the bitcoin price up in the long term as its economy continues to slow and the yuan sheds value.
The Wall Street Journal reported four days ago that the bitcoin rally was being driven by traders arbitraging the cryptocurrency and units of the Bitcoin Investment Trust (GBTC), which is publicly traded.
Although the Journal did not describe the arbitrage mechanism, its story claimed that narrowing spreads between the bitcoin price and the GBTC price allowed traders to profit as they would when arbitraging an exchange-traded fund (ETF) and its underlying assets.
"The increased activity on the OTCQX-traded fund may have triggered a wave of bitcoin buying, contributing to the price spike," the Journal wrote.
Market watchers on r/BitcoinMarkets have discounted this theory, pointing out that shares in GBTC traded in the public markets must be held by unit-holders for at least a year, meaning they are disconnected from the current bitcoin price.
"There is no mentionable arbitrage mechanism, only GBTC shares you can buy/sell are the year-old+ [Bitcoin Investment Trust] ones," one punter wrote on r/BitcoinMarkets.
Institutional trader Harry Yeh of Binary Financial said a slew of news coverage around bitcoin in the previous weeks has been a critical price driver.
Yeh pointed to the Scaling Bitcoin conference in Hong Kong, which produced the 'segregated witness' scaling solution that doesn't require a hard fork as one example. Additionally, the Satoshi 'unmasking' by Wired and Gizmodo has cast a spotlight on the cryptocurrency, he said.
Yeh said bitcoin may simply be rebounding from a pronounced price dive in 2014, when it was "very oversold". Conversely, he said the technical indicators, in his view, showed that bitcoin is now on a trajectory similar to its massive run-up in 2013, which led to it breaking the $1,000 mark.
"Looking at all the factors and the technical factors ... bitcoin could rocket past $600."
Binary FinancialBitcoin Price IndexGABIpriceScaling BitcoinTrading Volume
Jiang Zhuoer: BTC.Top Will Support the Camp Favored by a Majority of Hash Power in the Bitcoin Cash Hash War
Jiang Zhuo’er and his BTC.TOP , a major Chinese mining pool, will not take side in the upcoming Bitcoin Cash’s hash war between two competing camps, Bitcoin ABC and Bitcoin SV. Zhuo’er shared h
F2Pool Will Support the Mining of BCHABC and BCHSV after Bitcoin Cash Hard Fork
F2Pool, the sixth largest bitcoin mining pool in the world, announced on Tuesday that it will allow miners to mine both coins generated from the upcoming Bitcoin Cash hard fork after the chain split
IBM Says Blockchain Can Power 'Open Scientific Research' in New Patent Filing
A patent application published Thursday claims the process of conducting scientific research can benefit from the blockchain.
Led by a team at IBM's Watson Research Center, the patent application p
CFTC Fines Bitcoin Trader $1.1 Million for Crypto Fraud
The U.S. Commodity Futures Trading Commission (CFTC) has jailed a bitcoin trader and fined him over $1 million for running a fraudulent bitcoin and litecoin scheme.
According to a press release iss
Japanese Firms Claim Success in Marine Insurance Blockchain Trial
One of Japan's largest insurance companies, Tokio Marine & Nichido Fire Insurance, and IT firm NTT DATA have completed a trial that put the paperwork for marine cargo insurance claims on a blockchain.
Accenture Puts Software License Management on a Blockchain Platform
Global professional services giant Accenture has rolled out a new software license management application built with tech from distributed ledger startup Digital Asset.
Accenture announced in a pre
Singapore's Central Bank, SGX Develop Blockchain Settlement System
The Monetary Authority of Singapore (MAS) and the country's stock exchange, Singapore Exchange (SGX), have developed a settlement system for tokenized assets that can work across different blockchains
Colorado Regulators Crack Down on Four More ICOs
Colorado regulators took action against four ICOs Thursday, bringing the state's total number of cease-and-desist orders against crypto startups to 12.
The state's "ICO Task Force" rebuked Bitcoin