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Bitcoin Soars Passed $2,000 Amid Raging Demand and Growing Acceptance

Vee Tardrew
24 May 2017

If you had bought $100 worth of bitcoin back in 2010 and simply forgotten about it, your investment would be sitting at a cool $75 million today! Indeed, with a price tag hovering around the $2,300 mark (24 May 2017, 7:00am), there are many early adopters smiling broadly as bitcoin continues its exceptional bull run. Even those who decided at the beginning of May this year to invest have almost doubled their money, so far.

Michael Hudson, our CEO, predicted a $2,000 price point in an interview with IGTV UK post the SEC decision to not approve the Winklevoss’ application for a Bitcoin based ETF back in March this year, but the speed at which it has achieved his prediction has even us a little surprised.
Bitcoin Price Chart - 23 April - 23 May 2017

So what is driving this latest surge?

As always with bitcoin, there is rarely an isolated force behind a rally, and this is no exception. There are a number of events taking place at a global level that may be playing a significant role in the spike in demand and price.

1. Bitcoin Recognised as Legal Tender in Japan

 As we reported last week, Japan has passed law to recognise bitcoin as legal tender. As such, there is a flurry of activity coming from that part of the Pacific as Japanese individuals and institutions alike anticipate broader utility of bitcoin in coming weeks and months and scramble to secure holdings.

Many large retailers in the area have announced acceptance of bitcoin for payment, including Peach Airlines, who become the first commercial aviation company to allow bitcoin payments for air fares. (Sir Richard Branson’s Virgin also accepts bitcoin as payment but only for their Virgin Galactic space flight.)

Today, 24 May 2017, also sees the launch of a new Japanese bitcoin exchange, operated by GMO, an Internet giant in the region, which could also be having a positive impact on demand and price.  

2. Scaling Solution Agreement at Consensus 2017

The annual 2017 Consensus conference is under way in New York, and there have been media reports that there appears to be a glimmer of light at the end of the scaling debate tunnel. An agreement has been reached that entails the adoption of SegWit now, with a hard fork to increase the block size from the current 1MB limit to a 2MB capacity in the next 6 months.

The debate has been a 2 year long stalemate with numerous proposed solutions not finding favour with the majority of the bitcoin community. This drawn out scenario has led to a stalling of the technology insofar as it experienced increased delays in processing of payments. The concession, at the very least, reassures us that progress is being made to allow for a growth in capacity of the Bitcoin network, which will surely have a positive impact.

3. Alt Coin Boom

In recent months, we have also witnessed a marked increase in demand for alternative digital currencies such as Monero, Ethereum and Litecoin, to name just a few. Last week we saw Bitcoin take a dip below the 50% mark of the total cryptocurrency market cap, which is now reported to be $87,6 billion. The drop represents a significant shift in the cryptocurrency space, with more coins emerging as viable investment options. In most instances, alt coins are secured using bitcoin, and therefore as the appetite and interest in these coins grows, so the demand for bitcoin increases.

Since our establishment, Bitstocks has been monitoring the broader cryptocurrency market for viable opportunities for our clients - and ourselves. Recently we implemented a new strategy that involves carefully diversifying portfolios to include the coins we believe will have a positive impact on overall portfolio return.

All in all, it is a pretty good time to be a bitcoin and cryptocurrency investor, and we would not be surprised by a $3,000/bitcoin year end.

To the moon, bitcoin, to the moon!

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