For the first time since 2014, the price of Bitcoin passed $500 USD early Saturday morning.
Laura Shin of Forbes writes:
“One of the most fascinating aspects of the Bitcoin narrative is the trajectory of its price. Since its birth seven years ago, this abstract currency that only exists as computer code and/or in a small but rabid collective conscious has gone from completely worthless to almost $450 for a single Bitcoin.”
At around 4:20 a.m. UTC on Saturday, May 28th, Bitcoin’s price exceeded $500 per coin. The price initially achieved that level in mid-November of 2013, and until now had not seen a similar price since late August of 2014. Bitcoin is at an almost two-year high.
The result of a depreciating yuan?
The price surge may be a result of many seeking to move capital out of China as the yuan weakens, continuing to fall against the dollar over the past month. Yuan markets made up for 94% of the exchange volume distribution over the last 30 days.
China has strict capital controls which restrict the flow of money out of the country, controls which have become more stringent recently. This has prompted citizens to look for ways around capital restrictions. These restrictions combined with a weakening yuan can help explain the recent rise in demand for Bitcoin.
Shin suggests:
“History shows that influences on Bitcoin’s price will be as unpredictable as Grexit, Chinese capital controls, developer infighting, Ponzi schemes and whatever else fate has in store for this grand experiment with money.”
Bitcoin’s bubble, readjustment, and steady comeback
Over the last three years Bitcoin’s price has been relatively volatile, especially from late 2013 to the beginning of 2015.
During this period the price increased nearly tenfold over the course of two months, lost half that value over the next few weeks before rising back to near peak value, and then falling to the high $190s in January of 2015, a depth not seen since before the 2013 spike.
David Gilbert of International Business Times writes:
“The bitcoin community is in a state of flux as two groups battle to decide the future development of the cryptocurrency. One group (known as Bitcoin Core) wants to retain the current block size and instead change the way signatures are stored on the blockchain while the other (known as Bitcoin Classic) proposes the adoption of an alternative blockchain.”
However, for the last year and a half, the price of Bitcoin has been steadily rising, more than doubling its value