How red-hot is bitcoin? The digital currency dropped $ 300 in one hour this afternoon – and it was still up on the day. Why wasn’t it down on the day? Because it rose by more than $ 300 in the morning.
Bitcoin is going through one of its moments. It has doubled just this month alone, with several different drivers all converging on what is still a relatively thin market. That sparked a scramble to buy that pushed up the price of not only bitcoin but virtually every digital currency.
Bitcoin traded as high as $ 2,791 on Thursday, according to the research site CoinDesk, after opening at $ 2,476. At its high, that was nearly a 13% gain just today. The gains have been so furious that the wider capital markets have found it impossible to ignore – even CNBC ran a late-morning segment on the cryptocurrency’s gains.
In retrospect, that seemed to mark the top. The timing isn’t perfect, but after the CNBC segment, bitcoin’s prices started falling. At 12:24 p.m. ET, the price was at $ 2,700. Just over one hour later, it was at $ 2,350. On most days, that would be a massive loss, but the price again turned around. It most recently was trading at $ 2,558, up about 3% on the day. That kind of volatility isn’t unusual for bitcoin, but the dollar amounts are. Bitcoin has never traded in these ranges.
The entire digital-currency sector is rising this spring, for a number of reasons. A big one is new money pouring in from Japan and South Korea. Price quotes on exchanges in those countries are actually hundreds of dollars higher than on other exchanges, creating an arbitrage opportunity that is creating a price spiral. Another trend is the so-called “initial coin offering,” in which start-ups are offering their own digital currencies tied to their services, and raising tens of millions in capital for themselves.
The bitcoin industry also seemingly settled a long divisive fight over the best framework for expanding the network’s capacity for processing transactions, which has long been seen as a headwind against further development. Fidelity CEO Abigail Johnson this week spoke at the industry’s Consensus 2017 conference in New York, declaring herself a bitcoin advocate and urging the industry to work together to advance the currency’s appeal to mainstream users.
For more insight into stocks and bonds, deals and dealmakers, the economy and business, be sure to subscribe to the MoneyBeat podcast.