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Bitcoin Price Soars Over $266 and Hits a New All-Time High

(@emilyspaven) | Published on November 6, 2013 at 05:27 BST

UPDATE (7th November, 08:56 GMT): The bitcoin price just hit $300 on Mt. Gox. This is the highest it’s ever been.

The highest trades at the time of writing have been at $309.99 at 08:45 GMT. Bitcoin prices have been steadily increasing over recent weeks, but have accelerated pace in the last twenty-four hours.

Today’s price spike follows the discovery of so-called “Silk Road 2.0“, a resurrected version of Silk Road that came to light yesterday.

Senator Tom Carper, Chairman of the Senate Homeland Security and Governmental Affairs Committee, has already issued a statement stressing the “inescapable reality that technology is dynamic and ever-evolving and that government policy needs to adapt accordingly”.

As the price run continues, so too does regulatory discussion, with two Senate committees convening in the coming weeks to discuss the regulatory issues surrounding virtual currencies such as bitcoin.

The price rise in recent days hasn’t quite matched the velocity of that seen in April yet, when the price more than doubled in the course of just one week. But it’s entirely possible that this could change as the week continues.

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UPDATE (6th November, 12:35 GMT): The price of bitcoin crept up to $269 at 05:30 and then fluctuated mildly until it reached a new high of $270 at 10:30.

The total number of bitcoins in circulation is currently 11,955,775 and the market cap, using the current CoinDesk BPI now stands at $3.2bn – the highest it has ever been. A week ago, the market cap stood at $2.3bn, with the figure only reaching $1.8bn during April’s price peak.

Data from Bitcoinity shows some 576,920 BTC have been traded in the past seven days, with 215,834 BTC (37%) of this being traded in the last 24 hours alone.

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The price of bitcoin reached an all-time high this morning, beating the previous record of $266, achieved in April.

Trades were made this morning at 04:45 GMT over $267 on Mt. Gox, which is currently not included in the Bitcoin Price Index (due to lengthy withdrawal times), but still represents 24% of global bitcoin trading volume.

The value of the cryptocurrency has been increasing rapidly since 2nd October – the day after the closure of black marketplace Silk Road and the arrest of its owner Ross Ulbricht.

The price of bitcoin over
Changes in the price of bitcoin since 5th November

Many were of the opinion that the closure of such a high-traffic bitcoin site would irreparably damage the cryptocurrency. They have since been proven wrong.

The Bitcoin Price Index shows the price dipped from over $125 at 4pm (BST) on 2nd October, to $82 just three hours later, but was back up to $100 by midnight. After that, the price rocketed, reaching $200 a little under three weeks later.

silk-road-crash
The crash and then recovery of the bitcoin price after the closure of Silk Road.

This week, the price has been climbing at quite a pace, even jumping 8.7% from 3rd November to 4th November.

Jon Matonis, executive director of the Bitcoin Foundation, said: “This new record for bitcoin’s USD exchange price demonstrates the societal value of a monetary unit with a predictable and fixed supply.”

What’s behind the rise?

A bitcoin investor, who wishes not to be named, said positive media coverage over the last few weeks has contributed to the interest in, and demand for, bitcoin.

“The story about the guy in Norway who bought $27 worth of bitcoin years ago, then cashed it in and bought an apartment has led to a lot of retail investors believing it is easy to make money speculating in bitcoins,” he explained.

He went on to say the announcement that new bitcoin company Circle had raised $9m in funding was “huge news” and brought a lot of legitimacy to the space, thus encouraging more people to invest.

“I also believe that the price has been driven up by the big institutional buyers that have entered the market recently, some via SecondMarket’s Bitcoin Investment Trust,” the investor added.

Bitcoin Price soars to new heights
Where can the bitcoin price go from here?

He went on to say that network difficultly has grown so much that it is hard to accumulate bitcoins by investing in mining. “A lot of people got burnt buying mining equipment. Now they realize they won’t make their bitcoins back and have to go to the exchanges and buy bitcoins to gain exposure.”

The final factor the investor attributed the price rise to was the increased interest and exchange volume coming from China.

Bobby Lee, CEO of BTC China agrees. He believes Bitcoin prices have risen sharply in the past months because of “new buzz and demand in the China market”

“With BTC China’s elimination of trading commission fees, we achieved and surpassed our goal of raising awareness for bitcoin in China, and that has really helped pump up the prices of bitcoin globally,” he added.

Will the rise continue?

Lee is adamant that, in the long run, the price will continue to increase “until it hits the price range of a globally-adopted asset”. He added:

“With simple math and using some logic, you can quickly compute that globally adopted asset price. You would calculate and compare the circulation value, against the average holding times the number of people using bitcoins.”

Lee sees the value increasing as more and more people become interested in digital currency, likening interest in bitcoin to interest in the Internet back in the early days.

“In the mid-1990s, the technical folks were the early adopters and the first to recognize the benefits. Then, over time and with more press coverage, the mainstream joined the party,” he explained.

Unlike the Internet, the adoption and popularity of digital currency can be directly tracked and measured, using the price of bitcoin.

Will history repeat itself?

After the last high of $266 in April, there was a huge crash, with the price falling to a low of $50, six days later. The value then fluctuated over the next three weeks before becoming slightly steadier.

There are concerns that the price will follow this pattern and the current steep increase is building up to another crash.

“Price crashes tend to happen when you see near vertical increases. It all comes down to human nature – when greed and fear switch places, this leads to high volatility,” he said.

The anonymous investor we spoke to agreed with this sentiment said he is “pretty sure” bitcoin will crash again.

“It is impossible to know when this will happen and it might be from much higher levels than today. When the price starts going down a lot of the new investors will get scared and sell out on the low again,” he explained.

He went on to say that if bitcoin becomes more mainstream, the price will rise to a much higher level than it is at today.

The investor hopes that as time goes on and bitcoin gains a larger circulation and the public becomes more educated about digital currency, the future price volatility will be more moderate.

BTC ChinaPrices

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