Bitcoin, which has been banned by many governments, has hit a new high. Who is behind the surge in prices?

"Bitcoin has gone 'crazy', constantly setting new highs. The entire cryptocurrency circle is almost boiling with excitement. After encountering suppression by policies of many governments, Bitcoin's trend remains strong, which is quite exciting. It's a pity that I didn't buy more when it was at the bottom." Investor Zhang Ben kept expressing his emotions on WeChat, and his excitement and regret could be felt through the screen.

Data from the Bitfinex trading website showed that on October 13, the price of Bitcoin climbed to a high of $5,920, an increase of 16%. Although it has fallen back to $5,741.9 as of press time, the current price has exceeded the high of $5,388 set on October 12.

Bitcoin price hits new high

Let’s take a look at the domestic Bitcoin market first:

Data from the Okcoin trading website shows that on October 13, Bitcoin rose to a high of around 38,850 yuan. Especially after entering October, the price suddenly soared. Today, Bitcoin prices have quickly recovered the decline since September, rebounding more than 57% from the lowest point in September. If we extend the time axis to look at the Bitcoin trend chart, it is a situation where you can buy and sell as you please, and the price rises and falls as you please:

Let’s take a look at the overseas markets:

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According to data from the Bitfinex trading platform, the price of Bitcoin rose to a high of $5,920 in the early morning of the 13th US time. Although the price has since fallen back, it still exceeded the high of $5,388 set on October 12.

According to data from Japanese bitcoin exchange bitflyer, the price of bitcoin had climbed to around 580,000 yen between 9 pm and 12 noon yesterday. The price exceeded 600,000 yen in the early morning of the 13th. As of noon, the price of bitcoin was still struggling to rise, reaching a high of 630,500 yen.

According to data from South Korean trading platform Korbit, the price of Bitcoin began to rise in the early morning of the 12th, from a low of 5.5069 million won. By the early morning of the 13th, the price of Bitcoin had exceeded 5.9 million won. The price increase is still continuing. As of noon on the 13th, the highest price of Bitcoin reached 6.7656 million won.

(Click on the large picture to view the market)

Looking back, September was a dark month for the cryptocurrency industry. China first banned ICOs, and then shut down domestic Bitcoin trading websites, causing the price of Bitcoin to plummet to around 16,000 yuan on September 15, causing many investors to sell at a loss. However, the current attractive rise in Bitcoin prices has once again attracted the attention of a group of speculators, and speculative demand has not caused the price of Bitcoin to fall due to strong domestic regulation. The cryptocurrency industry, where speculative enthusiasm is constantly heating up, is not only strictly regulated by the Chinese government, but also by many countries including South Korea, Russia, Nepal, Malaysia, and Switzerland. However, when faced with policy supervision from many countries, the price of Bitcoin has once again hit a new high. We can't help but wonder: Why is the price of Bitcoin rising instead of falling at a time when the regulatory intensity of various countries is constantly escalating?

History seems to be surprisingly similar. Let's go back to February 9 this year. The central bank officially announced that Bitcoin trading platforms that violate serious regulations will be shut down and banned according to law. Several major trading platforms have completely suspended Bitcoin and Litecoin withdrawal services. Affected by this, Bitcoin transactions began to rebound strongly after a brief plunge, and the increase was far greater than before the policy was introduced.

As early as February 2014, Russia officially announced that the ruble is the only official currency and that the introduction of any other currency or substitute is illegal. It has repeatedly emphasized that Bitcoin transactions are highly speculative and have the risk of depreciation. However, after the Russian government banned Bitcoin, the development of Bitcoin in Russia has accelerated, and the market value of Bitcoin in Russia has hit new highs many times.

Who is behind the surge in Bitcoin prices?

Although the price of Bitcoin has fluctuated greatly due to national regulatory factors, in general, after each decline, it will recover the previous losses with a stronger trend and set a new high. In just 8 years, it has risen from around US$1 to the current price of around US$5,700. This increase is unmatched by any other trading product in history.

Although the rise in Bitcoin prices is due to speculation, its acceptance is far beyond imagination. The Securities Times Venture Capital reporter has contacted many cryptocurrency players and his intuitive feeling is that they have a spirit of faith in Bitcoin. In their view, Bitcoin belongs to the whole world, and the closure of Bitcoin transactions in China does not affect the legal transactions of Bitcoin in other countries.

Tian Ying, vice president of Okcoin, said in an interview with a reporter from Securities Times Venture Capital Exchange that the rise of Bitcoin this time was obviously driven by overseas markets, and the recognition of its value and the consensus reached on Bitcoin were the main driving forces for the rise.

"The value of Bitcoin can only be maintained by personal trust, but the public tends to follow the trend and is more likely to panic. Coupled with the infinite inflation characteristics of virtual currency, it will be normal for its value to increase or decrease tenfold in one day. Such a volatile digital currency is getting further and further away from its original intention." Financial writer Chen Sijin said in an interview with reporters.

Chen Sijin said that Bitcoin, as a commodity, belongs to the speculative market like the foreign exchange and gold markets. Because Bitcoin is quite difficult to regulate, the higher its price goes, the more attention countries will pay to it, the greater the possibility of a joint ban, and the greater the possibility that the channel for exchange with legal currency will be cut off.

Just a few days ago, Kenneth Rogoff, former chief economist of the IMF and professor of economics and public policy at Harvard University, also wrote that the price of Bitcoin will collapse. The main reason is that Bitcoin cannot remain out of regulation and maintain its "anonymous" characteristics.

The most well-known is the "scam theory" of JPMorgan Chase CEO Jamie Dimon, who believes that digital currency is worse than the tulip bubble and will eventually burst.

Securities Times reporter hereby reminds you that Bitcoin is a high-risk investment product. The use of Bitcoin is actually still in its infancy, and there is not even a consumer scenario to support its application. In addition, the capacity of Bitcoin itself is difficult to meet large-scale real-world transactions. If you buy at today's record high price, you may lose your money in the next few weeks.