Bitcoin enthusiasts from across the world revelled in the news that the digital currency's price reached a new annual high earlier this week.
The cryptocurrency peaked at $333.75 at 08:16 UTC on 30th October, reaching its highest level since January 2015 – when it famously dropped below the $200 mark.
Speaking to CoinDesk, Bobby Lee, CEO of China-based bitcoin exchange BTCC, attributed bitcoin's recent surge to a series of factors, saying:
"I think this price rise is a combination of the recent increased usage ... and also the recent good news in the industry, such as the no-VAT ruling in Europe, the end of the auctioning of Silk Road bitcoins, etc."
"Once again, people are re-discovering the many positive aspects of using bitcoin for payments as well as for holding bitcoin as a decentralised, safe and appreciating digital asset, immune to national central bank policies," he continued, adding that BTCC has seen a surge in trading activity.
"It's been slowly rising since mid-September," he noted.
Macro economic events
Speculation about bitcoin's price movements has always been rife with commentators often examining global macro economic events in an attempt to decipher the fluctuations.
According to the Bitcoin Price Index, the digital currency's price has been steadily rising since 21st September, when it opened on $230.86 and went on to close the day's trading at $226.61.
Since then, bitcoin's price has continued trending upwards, rising by over 44% to reach its peak price on 30th October.
A closer inspection of CoinDesk's BPI shows that bitcoin's price increased following the European Court of Justice's ruling which exempted bitcoin from VAT across all EU member countries on 22nd October.
Further afield, the exertion of capital controls in China also coincided with a price spike at the end of September.
A China driven surge?
Robert Viglione, a PHD student, who recently published an academic paper about the differences in bitcoin's price across the world, shared his take on the recent price rise, telling CoinDesk:
"It's tough to ever say definitely what's driving asset price movements, but the most compelling story at the moment comes out of China. True to bitcoin's nature as a disaster asset, as China's government steps up capital controls to limit one widely used avoidance path, its citizens appear to be shifting resources to the next best option, cryptocurrencies."
It is not of the first time that the implementation of capital controls by governments has a perceived influence in bitcoin's trading value.
Earlier this year, bitcoin passed the $300 mark, gaining increasing momentum in the wake of the Greek crisis.
Like Lee, Vigilione noted the upsurge in trading among some of China's bitcoin exchanges:
"Chinese exchanges seem to be trading at about a 10% market at the moment, which is a big shift from a historical premium of about 48 basis points below the global average. Clearly something is happening in China; whether that's the primary driver behind the recent price run-up isn't as obvious, but is certainly as good a story as any."
Lee elaborated on this theory, noting that bitcoin's price was trading up to 10% higher in the Chinese market in comparison to USD/BTC trades.
However, the CEO ruled out that the recent price spike had been triggered by foreign currency controls.
"Despite what people are suggesting, from what I can tell, it's not a currency controls issue, with people wanting to move RMB out of the country," he said. "Rather, it's just higher demand for buying bitcoins, either for payments, speculation, or for long-term holding."
A combination of factors
For Harry Yeh, managing partner at investment managing company Binary Financial, bitcoin's value increase could be attributed to a wide range of factors which include recent positive news about blockchain technology. Speculation in China, however, could also be driving the price up, he said.
Tim Enneking, chairman at the Crypto Currency Fund, was of the view that the recent focus on blockchain technology was receding and that bitcoin was attracting more attention, as people realize that its blockchain is the most pervasive of available options today.
Other short term factors, according to Enneking, included the launch of the Winklevoss' bitcoin exchange Gemini, a recent court decision that exempted bitcoin purchases from value-addex tax in the EU, and MasterCard's involvement in Digital Currency Group's recent funding round.
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