Bitcoin is back in news. The virtual currency has hit an all-time high of $6,000 on Friday. This surge has pushed its market capitalization to $100 billion at one point.
The growth of the “original” virtual currency has been at the rate of more than 500 percent this year – way ahead than any traditional assets. However, a weak link in bitcoin is its volatility. If it grows at the rate of 26 percent, it slides at the rate of 16 percent on a given day.
On Friday, bitcoin hit a record peak of $6,000.10 BTC=BTSP on the BitStamp platform, and was last at $5,964.24, up 4.7 percent on the day.
In layman’s terms, bitcoin is a digital currency that can be held as investment. If not, the other option is to use it as a core platform for future applications leveraging blockhain, its underlying technology.
However, the currency is not available, as there is scarcity in its supply. Today there are only 21 million bitcoins. According to analysts, Friday’s spike was the result of multiple factors.
According to Charles Haytor, a co-founder of data analysis website Cryptocompare, positive anticipation that China will tamper down its regulatory reforms on cryptocurrency has been the major catalyst behind this price hike.
China had earlier put up a ban on digital currency and even banned the practice of raising capital by offering tokens through initial coin offerings. However, analysts feel that this was a temporary ban, and China cannot stay away from digital currency market.
Jason English, vice president of Protocol Marketing, said, “As much as 60 percent of the world’s bitcoin mining is happening in China, and therefore, many of the large investments in ICO projects have also been coming from cryptocurrency holders in China, whether directly or indirectly.”