Bitcoin blows past $7,000,
double its value in mid-September
Speculators have shrugged off a
Chinese crackdown and other controversies.
Six weeks ago, it looked like Bitcoin's latest boom might be coming to an end.
The virtual currency had been worth almost $5,000 in early September, but then Chinese regulators announced a harsh crackdown on China's Bitcoin economy. On September 15, Bitcoin's price reached a low of $3,000. But then the currency bounced back, and it has been on a tear ever since. Last night the price of one bitcoin soared to about $7,000 for the first time—that's a ten-fold increase over the last year.
It's never easy to pinpoint exactly what's driving market optimism about Bitcoin, and this case is no exception. A major factor in Bitcoin's growing value over the last year has been the broader popularity of initial coin offerings—sales of new Bitcoin-like cryptocurrencies. Because it's not easy to set up an exchange for trading a new currency for dollars, most ICOs are conducted using bitcoins or Ethereum's ether as an intermediary—customers buy those currencies first and then trade them in for the new token. There has been a lot of worry that ICOs are an unsustainable bubble in recent months, but people kept pouring money into them in October. Token sales generated more than $300 million last month, according to statistics from Coinschedule.
And bitcoins have been performing better than a lot of other cryptocurrencies. Other major cryptocurrencies, including ether, the cryptocurrency of the Ethereum network, have yet to regain their early September highs. By contrast, Bitcoin is now more than 40 percent above its early September peak. We can expect more volatility in the coming weeks, as Bitcoin is due for another contentious network fork in mid-November. Still, speculators don't seem very worried about that controversy denting the popularity of the Bitcoin network.