After taking most of 2015 off, Bitcoin price volatility has stormed back.
According to the CoinDesk Bitcoin Price Index (which goes by Greenwich Mean Time), the last day of trading has seen a low of $355.81 and a high of $416.62 - a Bitcoin price level last seen nearly a year ago.
Just 45 minutes after hitting that high, the price of Bitcoin had fallen $39, a 9.38% drop. The Bitcoin price is up about 60% over the past month.
By contrast, the Bitcoin price had spent most of the year bobbing in the $200 to $300 range.
While Bitcoin enthusiasts welcome the sudden rise in price of the digital currency, it brings back bad memories of the 2013 bubble. After soaring 8,500% in just a few months, the price of Bitcoin crashed 89%, bottoming out this past January.
Whether the current Bitcoin price spike is a reflection of positive trends or a momentum-inflated bubble is debatable. But if you're looking for triggers, they're not hard to find.
Why the Bitcoin Price Is Rising
The first theory, proposed by the website ZeroHedge, maintains that the tightening of capital controls by China's central bank created a surge in demand for Bitcoins.
The head of the main Chinese Bitcoin exchange disputed that theory.
"Despite what people are suggesting, from what I can tell, it's not a currency controls issue, with people wanting to move RMB out of the country," Bobby Lee, CEO of BTC China, told CoinDesk. "Rather, it's just higher demand for buying Bitcoins, either for payments, speculation, or for long-term holding."
Instead, Lee suggested that people had "re-discovered the many positive aspects of using Bitcoin for payments" and pointed to some recent positive Bitcoin news, such as the European Union ruling that Bitcoin is a currency and so not subject to the EU's value-added tax (VAT).
Still, it seems a bit of a stretch that Chinese interest in Bitcoin would suddenly skyrocket because of good news out of Europe or a universal "rediscovery" of what makes Bitcoin appealing.
But if you're the CEO of China's (and the world's) largest Bitcoin exchange, are you really going to publicly taunt the People's Bank of China by bragging about how people are using your company's services to defy government policy?
This much we know: The daily trading volume on China's biggest Bitcoin exchange, BTC China, more than tripled in October from September, from about 20,000 trades a day to more than 60,000.
So demand from China is at least a primary factor in the recent Bitcoin price surge.
But those positive developments Lee mentioned may be helping boost demand for Bitcoins elsewhere in the world, adding to the heightened interest from China.
Here's what I mean...
Multiple Factors Are Behind the Bitcoin Price Increase
For example, the Oct. 22 EU ruling that Bitcoin is exempt from the VAT coincided with a spike in volume in euro/BTC trading on the Kraken Bitcoin exchange.
In mid-September, many of the world's biggest banks announced an alliance that would study ways they could use the Bitcoin blockchain, the technology underpinning the digital currency.
[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
In the United States, New York issued its first BitLicense in September. The Commodity Futures Trading Commission (CFTC) declared Bitcoin a commodity, bringing some regulatory clarity. And the Winklevoss twins' Gemini Bitcoin Exchange, aimed at institutional investors, launched in early October.
And all of that followed months of mostly positive news regarding the rising stream of venture capital into Bitcoin startups, as well as increasing evidence that Wall Street is taking Bitcoin seriously.
It's still hard to tell whether this run-up in the Bitcoin price means the digital currency has truly turned a corner and will continue to appreciate, or whether this is false hope that will end in another crash back to $200.
But given the steadily growing interest in Bitcoin as a currency, an investment, and a technology, the Bitcoin price is destined to go much higher in the long term.
Follow me on Twitter @DavidGZeiler.
Busting Bitcoin Myths: One of the problems that has dogged Bitcoin has been critics denouncing it as a Ponzi scheme. Such attacks often appear in the comments sections of Internet articles about Bitcoin, and sometimes are the subjects of the articles themselves. But calling Bitcoin a Ponzi scheme misunderstands the fundamental nature of both. Here's why Bitcoin can't be a Ponzi scheme...
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.