Bitcoin prices today are climbing after two controversies subsided and investors gained more confidence in the future of the world's oldest and most valuable cryptocurrency.
According to the CoinDesk Bitcoin Price Index, the price of Bitcoin surged today (Friday) to an all-time high of $3,586.23 around 8 a.m., surpassing Tuesday's high-water mark of $3,538.04.
Bitcoin prices are up about 24% over the past week (up $690), 53% over the past month (up $1,233), and 268% year to date (up $2,596).
The swiftly climbing Bitcoin prices have raised hopes the digital currency will reach $4,000 or even $5,000 by the end of the year.
Several major developments drove this week's surge in Bitcoin prices. Here's what happened…
Hard Fork Unexpectedly Pushes Bitcoin Prices Higher
Many cryptocurrency investors dreaded the Aug. 1 Bitcoin hard fork.
A segment of the Bitcoin community that wanted a different solution to the two-year-long debate over how to scale the network to accommodate the rising number of transactions created a new variant of Bitcoin called Bitcoin Cash. This version of Bitcoin can process blocks of transactions of up to eight megabytes, much larger than the one-megabyte limit on "legacy" Bitcoin.
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But Bitcoin Cash is incompatible with legacy Bitcoin, despite the similar names. After Aug. 1, Bitcoin Cash became its own cryptocurrency and started trading on several cryptocurrency exchanges.
Most people assumed – myself included – that a split this severe would create confusion and uncertainty among Bitcoin investors. The expectation was for high volatility and a drop in the price of Bitcoin.
But the hard fork went more smoothly than anyone expected. Relief that the legacy Bitcoin version was left unharmed by the existence of Bitcoin Cash encouraged investors to buy.
A side effect of the hard fork also helped drive more money into Bitcoin.
Anyone who owned Bitcoin prior to the hard fork ended up with an equal amount of Bitcoin Cash after the fork. Many of those folks rushed to "dump" their windfall Bitcoin Cash by selling it in an exchange for legacy Bitcoin. The extra buying helped push up the price.
Meanwhile, the Bitcoin Cash price struggled to stay above $200 for several days. But so far it has withstood the "dumping" fairly well. As of today, Bitcoin Cash had risen to about $330.
Those who held onto both versions have enjoyed a 10-day combined gain of 44%.
But Bitcoin investors also had something else to cheer about…
Bitcoin Leaps the SegWit2x Hurdle
SegWit2x is a solution to the scaling debate that was proposed in February using some coding tricks to squeeze more transactions into each one-megabyte block.
The week before the hard fork, Bitcoin miners signaled support for SegWit2x. But as a precaution, the SegWit2x proposal didn't "lock in" right away.
That finally occurred this week. The prospect of a widely accepted solution to the scaling issue was taken as a major positive for Bitcoin. It was yet another green light to buyers.
The lifting of this headwind, along with the catalysts resulting from the hard fork, gave the price of Bitcoin one of its strongest boosts of the year.
But despite the air of celebration in many corners of the Bitcoin universe, a dark event lurks in the near future that could send prices spinning in the opposite direction.
Yet hardly anyone is talking about this…
The Biggest Threat to Bitcoin Prices Right Now
About the Author
Dave 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.