Bitcoin traded above US$2,200 on Monday, notching year-to-date gain of more than 130 percent, as a new wave of speculative investment drove up the crypto-currency, the Wall Street Journal reports.
Rising more than 15 percent from Friday’s closing price of US$1,913, which itself was a fresh high, bitcoin price is now up almost 400 percent compared to a year ago.
The market for the nearly decade-old crypto-currency is volatile and opaque. But several trends are underpinning the recent rise, including the perception of increased geopolitical risk and new buying from Japanese investors, the report said.
A new surge of speculative investment in virtual currencies in general is also popping up owing to new fundraising efforts called token sales, or initial coin offerings.
Startups are building bitcoin-like coins into their products, and offering them to the public ahead of a product launch.
Another factor is Asia, and specifically Japan, where bitcoin just came under the nation’s regulatory umbrella this spring, sparking a surge of trading from the county, the Journal said.
“The Japanese have caught the bitcoin bug,” Charles Hayter of the research firm Crypto Compare was quoted as saying.
While bitcoin moved above US$2,100 in the US, it was trading at a higher price in yen terms, Hayter said. That gap sparked a frenzied arbitrage trade.
Hayter warned, however, that, without fresh fundamentals supporting bitcoin, “irrational exuberance is taking hold” in the Japanese bitcoin market.
There is also talk that a longstanding and divisive bitcoin debate about the structure of trading in the market may soon be settled, opening up more demand for the coin, the Journal noted.
– Contact us at [email protected]