Bitcoin (BTC=), the world’s most popular digital currency, has been on a roll — but no one is really sure why.
After dipping well below $200 in January, bitcoin traded at more than $410 Tuesday afternoon before cutting some of those gains, according to the CoinDesk Bitcoin Price Index. That’s about 25 percent higher than the same time last year but well below the historical high of about $1,150.
This upswing, which began about a month ago when bitcoin traded below $240, comes on the heels of a steady stream of good news for the digital asset and its associated ecosystem. But even with recent favorable regulatory rulings, press coverage and business investments, experts in the space are struggling to explain the one-month jump of more than 70 percent.
For comparison, gold (@GC.1) is down about 5 percent on the year, and slightly negative on the month.
Some have attributed the size of the recent jump to investors’ fear of missing out (FOMO), while others such as “Fast Money” trader Brian Kelly point to ecosystem headlines like the Winklevoss twins launching their exchangeand the Digital Currency Group announcing funding from Bain and MasterCard (MA).
But bitcoin has boasted a steady parade of media highlights and major investments from important financial firms all year, so it’s not immediately obvious why this past month would mark a turning point.
Brendan O’Connor, the CEO of bitcoin trading firm Genesis Global Trading, told CNBC he has no easy answers about the price jump. Although he said rumors were flying around the community about international rings of traders teaming up to drive up the exchange rate, O’Connor was unable to confirm anything he’d heard.
For its part, Genesis Global is experiencing a “dramatic increase in activity” from renewed interest in bitcoin as a tradable asset, O’Connor said.
“When the price starts going up, people start coming out of the woodwork,” he said. “We’re setting new records almost on a daily basis for amount traded and number of transactions.”
It should be noted that bitcoin is a relatively illiquid market, so its exchange rate against major world currencies has been historically volatile. Still, O’Connor said volume from the Chinese bitcoin market has been “off the charts,” so there may be a genuine upswing in interest from that region.
In fact, Kelly suggested in a Tuesday note that Beijing’s tightening of capital controls may have spurred some of the recent price gains.
Additionally, many in the bitcoin community insist that the daily price of the cryptocurrency is not a relevant metric, as it distracts from the world-changing potential of the technology.
Others worry that the cycle of mainstream media coverage on bitcoin’s price will recreate a story they’ve seen before:
Written by Everett Rosenfeld of CNBC