Bitcoin surged on Thursday morning, blowing past $ 5,000 for the first time and setting a new record price above $ 5,200.
The rise is remarkable because there has been a bit of unfavorable news about Bitcoin in recent weeks. China, one of the biggest markets for Bitcoin, is shutting down trading. The Bitcoin community faces ongoing acrimony over how to scale the Bitcoin network. A contentious fork split the Bitcoin network in two in August, and there might be another schism in the Bitcoin community come November.
Finally, many experts believe that the broader blockchain of the world is in the middle of an unsustainable bubble. If that bubble pops, Bitcoin's price is likely to fall with it.
So what explains Bitcoin's rise? One factor may simply be that the blockchain bubble has not run its course. People are continuing to hold "initial coin offerings" of newly invented cryptocurrencies. Despite a falling Bitcoin price last month, ICOs raised more than $ 600 million in September, according to data from CoinSchedule.
A healthy ICO market creates Bitcoin demand because Bitcoin is often used as an intermediary currency for token sales. Legal and logistical barriers make it difficult to sell newly created crypto for conventional currency such as dollars or euros. But it is relatively easy to sell new cryptocurrency in return for Bitcoin. So people who want to participate in ICO often need to buy Bitcoins first, pushing Bitcoin prices.
Another possible reason for the Bitcoin hike: the market may actually see a fork as a good thing. The August fork divides the Bitcoin network into two, creating a new crypto called Bitcoin Cash which is a perfect copy of the original Bitcoin network-including transaction history. Anyone who has one Bitcoin before the fork has one Bitcoin after a fork and one unit of Bitcoin Cash. And surprisingly, the combined value of these two currencies is higher than Bitcoin's worth before the fork.
So the market will probably ignore the possibility of another fork in November because it does not expect another fork to hurt the value of Bitcoin. In fact, this can make existing Bitcoin holders richer.
The last factor driving Bitcoin growth: increasing interest from major financial institutions. For example, rumors circulated last week that Goldman Sachs is preparing to open a "Bitcoin table" for cryptocurrency trading. Speculators may be bidding on Bitcoin prices in anticipation of greater demand from Wall Street in the coming months...