If you were expecting the price of bitcoin to settle down and remain stable for a while after recently setting one record after another, you are in for a shock. The BTC/USD exchange rate just went over $2640 for the first time, thanks to another 11% daily rise.
To put this meteoric rise in some perspective, only at the start of March 2017 we reported that the price of bitcoin surpassed that of an ounce of gold for the first time. Now, with gold trading at $1,290, bitcoin is more than double its value, completing a 100% rise in less than three months.
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In terms of overall market cap, the bitcoin blockchain is now valued at $43 billion, or almost two-thirds of the current equity market cap of Paypal (NASDAQ: PYPL). The value of the entire cryptocurrency and blockchain assets ecosystem is now $87 billion, well over that of Paypal, with BTC dominance remaining at just under 50%.
Trading volumes supporting the recent move are very high, reaching over $2 billion daily in BTC/USD trading. However most of the trading activity is coming from Asia, as we reported before, with exchange rate premiums now reported on exchanges in Japan, Korea, China and India.
Trying to rationalize this irrational exuberance, bitcoin holders and advocates give a number of reasons for the jump. One is that Japan is to stop applying consumption taxes on cryptocurrencies in July. Another is that mainstream adoption seems closer than ever with companies such as Fidelity jumping on the bandwagon. The Chinese are also said to be protecting themselves from an expected economic downturn that might devalue their RMB holdings. And lastly, an agreement announced on Tuesday to end the bitcoin civil war by 56 companies representing 83.28% of the hashing power (which includes activating SegWit at an 80% threshold and a 2 MB hard fork within six months.)