bitcoin just hit an all-time high

Here’s why bitcoin just hit an all-time high

Published: Feb 24, 2017 10:15 a.m. ET

Bitcoin is trading at an all-time high for the first time in more than three years.
A single coin US:BTCUSD  went for as much as $1,206.60 on Friday, according to the CoinDesk Bitcoin Price Index, surpassing the previous high of $1,165.89 reached in November 2013.
The run-up in price has been driven in part by speculation that the Securities and Exchange Commission could soon authorize the creation of the first bitcoin-focused exchange-traded fund. Its ruling about whether to allow the creation of the Winklevoss Bitcoin Trust, one of three proposed ETFs, is expected by March 11.
Also, a Japanese law that provides a regulatory framework for the bitcoin industry is slated to take effect in April. It could entice large banks and brokerages to become involved in the market, which could benefit the price, said Chris Dannen, a founding partner at Iterative Instinct, a small New York-based private-equity fund that trades crypto-assets. Japan recently surpassed China as the world’s largest bitcoin market by trading volume.
Fears that Chinese authorities might seek to crack down on that country’s swiftly developing bitcoin ecosystem have abated. A former governor of the People’s Bank of China said on local television earlier this month that China should properly regulate bitcoin rather than seek to kill it.
Authorities appear to have done exactly that, nudging local exchanges to implement new transaction fees and sought to upgrade their anti-money-laundering systems to help prevent market manipulation and ensure compliance with all local financial laws.
With more than 50 exchanges operating world-wide, the market for digital currencies is incredibly fragmented, said Charles Hayter, chief executive officer and founder of CryptoCompare, a company that provides data and analytics about digital currencies.
There is no one consolidated bitcoin price, and there are often disparities in prices denominated in different fiat currencies. For example, the price of a bitcoin in Chinese yuan presently trades at a discount to the U.S. dollar price.
The price of a single coin rose as high as $1,242 on some exchanges in late 2013 before the collapse of Mt. Gox, then one of the largest digital-currency exchanges, ushered in a two-year bear market that saw the price dip as low as $200.
Daily bitcoin trading volume has averaged $250 million a day in 2017, up 55% from 2016, according to Chris Burniske, Blockchain Analyst and products lead at ARK Invest. On Friday morning, volume over the past 24 hours surpassed $400 million. It was as high as $600 million in mid-January.
Of course, some cautioned investors not to fixate on the price.
“Bitcoin is at a stage now that is a lot like the early Web,” said Neeraj Agrawal, director of communications at Coin Center, a bitcoin advocacy group based in Washington, D.C.
“So if you are focused on a longer time horizon, then obsessing over short term drops and rallies in the price becomes a distraction from the big picture.”