Bitcoin is back, thanks to its spiraling price, and The Wall Street Journal, the U.S. largest financial newspaper, took note today with a headline proclaiming: “Bitcoin Frenzy Back As Epic Bust Fades.”
The article notes that this week’s 50 percent price jump recreates scenes from 2013 and explores the question of history repeating itself. The publicity in 2013 pushed speculative buying which drove the price from $13 to $1,100 before crashing.
The reporter, with a careful eye to recent news, notes early on that bitcoin’s price volatility is currently overshadowing a steadily growing interest in the block chain’s application to traditional finance.
Most of the article encapsulates recent bitcoin history for readers who might not have not been paying close attention. The summary gives readers an overview of recent events to allow them to form an opinion about what the current price surge portends.
Bobby Lee, CEO of BTCC, the Beijing-based bitcoin exchange, credits the current price surge to a herd mentality.
The European Union has ruled bitcoin will not be subject to value added taxes, a position at odds with the U.S. Internal Revenue Service.
Since 2013, more bitcoin exchanges have emerged in Europe, Asia and North America while the once dominant Mt. Gox collapsed in early 2014.
The Bitcoin Investment Trust, a bitcoin-exchange-traded fund, gets mentioned, as well as the Winklevoss twins’ recent exchange venture. Exchanges like Tera Exchange offer bitcoin derivatives while others provide bitcoin hedging products.
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Gil Luria, the Wedbush analyst and an early Wall Street bitcoin supporter, predicts a $600 price in 12 months.
Line charts accompanying the article show the rise of bitcoin transactions and the price swings since 2013.
While transactions have increased steadily since 2013, the article notes, bitcoin remains a relatively small market with a capitalization of less than $7 billion and about 14.8 million bitcoins in circulation.
Rising interest is building demand for a limited bitcoin supply.
The role of Asian trading on the priced surge gets examined. Volumes in the China-based exchanges – BTCC, OKCoin and Huobi, have spiked, causing some to speculate that the Chinese use bitcoin to get around new capital controls.
Lee, however, believes the Chinese are exceptionally speculative in trading bitcoin, which accounts for much of the present surge.
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