The Bitcoin price is rising again as several catalysts have come together to drive its U.S. dollar value up 23% over the past week.
The price of Bitcoin rose to $5,386.23 today (Thursday, Oct. 12), according to the CoinDesk Bitcoin Price Index. That's an all-time high, easily eclipsing the previous high of $5,013.91 set Sept. 2.
The king of cryptocurrencies is now up 447% year to date and 730% over the past 12 months.
The latest Bitcoin bull run comes just one month after the Bitcoin price fell as much as 41% in two weeks. When critics in the media and Wall Street again called Bitcoin a bubble and pronounced it dead, I explained why they were wrong.
In fact, anyone familiar with Bitcoin's resilient history expected this rebound. The only question was the timing.
That's where the past week's catalysts come in...
Why the Bitcoin Price Is Rising Now
The biggest catalyst driving the Bitcoin price higher right now is the prospect of two hard forks over the next month or so. A hard fork is a split that creates a new, separate version of Bitcoin.
That would seem to be a bad thing, and in some respects it is. More versions of Bitcoin dilute the brand and confuse novice users.
But a Bitcoin hard fork also generates what's called an "airdrop." Anyone who owns some Bitcoin at the time of a hard fork receives an equal amount of the newly created version.
That's what happened Aug. 1 with the Bitcoin Cash hard fork. After that hard fork, many Bitcoin investors sold their "free" BCH for a profit. Bitcoin Cash has traded between $200 and $1,000 since then.
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So a person who held 10 bitcoins as of Aug. 1 could have pocketed as much as $10,000 from the Bitcoin Cash hard fork without touching any of their original 10 bitcoins.
With both the Bitcoin Gold hard fork (expected Oct. 25) and the SegWit2x hard fork (expected around Nov. 18) on the horizon, investors are stocking up on Bitcoin in anticipation of these airdrops. The more Bitcoin you have, the more "free money" you receive.
The race to buy Bitcoin has had an impact on the entire cryptocurrency space, with many coins falling as Bitcoin soared.
Typically, the majority of cryptocurrencies move in tandem with the Bitcoin price. But crypto investors eager to wring as much value as possible out of the Bitcoin hard forks have been reallocating their capital.
[Investing tip: After the hard forks are complete the process should reverse, with some of the airdrop money bolstering the prices of cryptocurrencies like Ethereum, Litecoin, and Ripple, as well as dozens of others.]
In addition to the hard fork drama, several other developments in the past week have fueled the Bitcoin rally...
More Reasons the Price of Bitcoin Is at an All-Time High
A couple of rumors have also played a role in the rising price of Bitcoin.
One particularly powerful rumor is that online retail giant Amazon.com Inc. (Nasdaq: AMZN) is considering accepting Bitcoin as payment. It's unclear whether there's any meat to this rumor, but it definitely would give Bitcoin a positive jolt.
Equally compelling is speculation that China may once again allow Bitcoin trading, but with much heavier regulatory oversight. Since the Chinese crackdown on Bitcoin exchanges in early September was the main cause of the last Bitcoin price crash, a policy reversal would buoy the Bitcoin price.
Finally, several Wall Street figures had positive things to say about Bitcoin, directly contradicting the negative comments from the likes of JPMorgan Chase & Co. (NYSE: JPM) CEO Jamie Dimon.
On Tuesday, billionaire Mike Novogratz, a former manager of the Fortress Investment Group, said on CNBC that he was lured out of retirement by the sky-high prospects for Bitcoin and other cryptocurrencies. He's launching a $500 million fund targeted at cryptocurrency investing.
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"It would not surprise me if in the next six to 10 months, we're over $10,000," Novogratz said of the Bitcoin price.
Rumors have also surfaced that Goldman Sachs Group Inc. (NYSE: GS) is mulling the possibility of trading Bitcoin. In a tweet on Oct. 3, CEO Lloyd Blankfein admitted the bank is "still thinking about Bitcoin," although it had made "no conclusion" yet. Nevertheless, Blankfein's open-minded stance is a far cry from Dimon's attacks.
If more people on Wall Street begin to view Bitcoin as a store of value and an investable asset class, the resulting flood of money into Bitcoin will more than equal this year's price rise.
Here's how high the price of Bitcoin could go in the next few years...
Why a Bitcoin Price Prediction of $10,000 Is Just the Start
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Novogratz said a Bitcoin price of $10,000 within 10 months - nearly double today's price - would not surprise him. It wouldn't surprise me, either, because the odds are the price of Bitcoin is headed much higher than that.
In July, stock analyst Ronnie Moas of Standpoint Research published a report on cryptocurrencies in which he predicted that Bitcoin could reach $50,000 by 2027 - nearly 10 times the current price.
"It looks to me as though we are at the same point in the adoption curve as we were in 1995, when we went from 1 million Internet users to 10 million," Moas told Money Morning in an August interview. "The following year, the Netscape browser came online and we went from 10 million users to hundreds of millions of users overnight."
Wall Street analyst Tom Lee, head of research at Fundstrat Global Advisors, is even more optimistic. He believes Bitcoin will reach the $20,000 to $50,000 range by 2022 - just five years from now.
And Kay Van-Petersen, of Saxo Bank, forecast in May that Bitcoin's share of the foreign exchange market would increase to 3.5% over the next decade, driving its price to $100,000.
If you really want to dream big, there's Xapo CEO Wences Casares' prediction that one Bitcoin will be worth a cool $1 million in 10 years. His reasoning is that Bitcoin will become a "global standard of settlement" - essentially the ultimate reserve currency.
And while that may sound far-fetched now, recall that the Bitcoin price was just $13.30 on Jan. 1, 2013. Had anyone suggested Bitcoin would rise past $5,000 in less than five years, no one would have taken them seriously.
But here we are.
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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.