Bitcoin is suddenly popular again

After a bombshell in 2013, Bitcoin experienced a whole year of negative news in mid-2014, such as the bankruptcy filing of Tokyo Bitcoin exchange Mt. Gox. Since then, the price of Bitcoin has been hovering between $200-300.

But now, it has come out of this slump.

Bitcoin prices have been rising for seven consecutive weeks, the longest upward cycle since November 2013. Industry experts and insiders have a range of reasons to explain the recent surge.

Market participants cite two main reasons for the rally. The first is growing interest and acceptance among financial firms, in large part because of bitcoin’s blockchain technology, including Goldman Sachs, Morgan Stanley and others, who have taken an interest in it and are seeking to apply it to securities trading, derivatives and lending.

According to Gil Luria, an analyst at Wedbush Securities, Bitcoin is finally getting the attention of financial institutions, saying:

It is becoming increasingly clear that banks and financial institutions value Bitcoin and blockchain technology as an important part of future financial services. As investors realize that many applications will be built on the Bitcoin blockchain, they ultimately conclude that if these applications are successful, the price of Bitcoin will also rise. Based on our expectations for Bitcoin applications over the next decade, our target price for Bitcoin in 12 months is $400.

Others in the community are speculating that China’s economic situation could fuel the market’s rise, and that Bitcoin could offer a potential workaround for capital controls.

Since August, the yuan has continued to depreciate, and China's stock market has experienced a two-month rout, with funds flowing out at an unprecedented rate. Investors withdrew $194 billion in September, and outflows may reach $669 billion this year.

Recently, the European Court of Justice has positively ruled that virtual currencies should be treated like traditional currencies and exempt from VAT, a ruling that is widely seen as a major positive.

Ashraf Laidi, CEO of Intermarket Strategy, said in a report this morning that the EU ruling could help cryptocurrencies become a “store of value,” stating:

“Last week’s ruling by the European Court of Justice will give exchanges, brokerages and banks a push to launch bitcoin-related instruments such as ETFs for the purpose of trading, hedging and speculation. Bitcoin’s medium of exchange can only grow from here. Its ‘preservation of value’ may not be a consideration today, but it may be next year.”

Who knew legality could be so lucrative?

－－－－

Original article: http://www.bloomberg.com/news/articles/2015-11-02/bitcoin-is-suddenly-surging-again
By Julie Verhage Olga Kharif
Compiled by: Satuoxi
Editor: Satuoxi
Source (translation): Babbitt Information