Bitcoin has been on an upward trend for months, although the cryptocurrency’s volatility has taken it on a rollercoaster ride just when you thought it was going to hit a new milestone. Now, however, Bitcoin’s value has passed the $4,000 mark and there’s no denying it.
In the past couple of days, Bitcoin has risen in value in an insane rhythm. On Saturday it was trading below $3,700 and then, on Sunday, it was suddenly past $4,000, hitting as high as $4,224.48.
That’s an impressive feat for a decentralized currency that most people didn’t even hear about until recently. But the question remains – why did it surge now? What caused the valuation? Unlike traditional currencies, Bitcoin’s value isn’t tied to political situations in any country, it’s not tied to armed conflicts, election seasons, and so on and so forth. The only things that could affect Bitcoin prices are things related to Bitcoin.
That being said, a couple of weeks ago something interesting happened – a bitcoin clone was created, called Bitcoin Cash. Despite the name, it didn’t actually draw too much attention and people pretty much ignored it. Then, Segregated Witness, also known as SegWit, a protocol update proposed by the Bitcoin Core development team, went live, freeing up space in blocks, and, in turn, allowing for more transactions to be stored in each one. This has solidified people’s trust in Bitcoin as a whole.
There’s also another reason for the hike in price – Initial Coin Offerings, also known as ICO. After the SEC concluded that digital currency financing events can be regulated as securities, more people became comfortable with the idea that this type of transactions will be under just as much scrutiny as regular transactions. Investors who want to participate in ICOs need to convert traditional currencies to Bitcoin or other cryptocurrencies, which could drive up the price.
Don’t get too excited about Bitcoin hitting $4,000, however. Crytocurrencies are extremely volatile. It could crash to $2,000 tomorrow or climb to $5,000, as both situations are equally possible with Bitcoin, as per previous experience.