No one wanted it to come to this, but circumstances require that we talk about bitcoin. I mean, just look at this:
The world's favorite digital currency doubled between May of last year and January then doubled again into this month, with a particularly ferocious streak in the past five days. Blocks of code denoting the existence of a single bitcoin fetched a high of $1,832 on Thursday before slumping Friday.
As always, the proximate causes for the run-up are murky. Last month Japanese authorities shrugged and admitted that bitcoin might as well be considered a currency, a much-needed morale boost after the SEC decided that bitcoin ETFs were an abomination of nature not destined for this world. It doesn't seem to matter, however, that Germany's Bundesbank made the opposite judgment earlier this week:
“Bitcoin is a means of exchange which is not issued by a central bank, but by unidentified actors. I do not see it as a currency,” Carl-Ludwig Thiele, a board member of the German central bank, told the newspaper Welt am Sonntag. “If you think Bitcoin would be as safe as the euro or the dollar, you have to take responsibility for it. We can only warn people not to use the bitcoin to preserve purchasing power.”
Bitcoin rose another 7 percent in the days following Germany's pronouncement.
You can find all sorts of other justifications for the recent explosion. Here's a redditor saying it's about a “MASSIVE rise of the public interest in Bitcoin in Latin America (and some other regions).” Here's a guy who thinks paying for stuff with a smartphone, as millions of people currently do with fiat currency, is helping drive bitcoin up. Here's a guy launching a fund to attract institutional investors to bitcoin arguing that institutional investors have become attracted to bitcoin:
"The biggest driver right now is you're starting to see institutional investors take a keen interest in the entire sector," said Brian Kelly, founder of Brian Kelly Capital, which recently launched a digital assets fund for outside investors.
"I don't think this is hot money. This is real money that's going to sit around and build the new internet," Kelly said, citing his conversations with institutions and other investors.
Whatever the reasons, if there are any, it's a good show. To wit: in the course this post's creation, bitcoin went from a day of feeling queasy to a day of spewing chunks. Over the last 24 hours the asset fell more than 8 percent:
Once again the inexorable currency of the future, bound by no governmental authority and subject only to the immutable Code, is doing a fine impression of tulip mania. We're happy to watch.