What Has Gotten Into Bitcoin?

Bitcoin is up 16% this month:

And it is up 86% YTD 2016:

Obviously there is more demand for the leading digital currency than there is supply of it right now.

My guess is this is speculation driven (the more it goes up the more traders want to bet on it) and does not represent any fundamental change in the usage of Bitcoin. The USD transaction chart doesn’t show any massive increase in transaction volume this year.

But whatever the cause, Bitcoin is on a tear going into the end of 2016. Seven years in, there are no signs of this slowing down.


Comments (Archived):

  1. jseliger

    Could be Venezuela and to a less extent Argentina.

  2. jason wright

    orchestrated pump timed to suck in holiday season punters? to push alt coins down in prep for profit pumps later?

  3. falicon

    No idea, but Kevy likes! 🙂

  4. Mario Valente

    Turmoil in China and de-monetization in India

    1. bdub

      from what i understand, most of the big moves in bitcoin price over the last couple years have been drive by people getting money out of china. recent chinese bond trouble and more capital controls on the way = bitcoin price up. would be interesting to see how india demonetization is impacting price.

  5. Ryan Foscaldo

    Roger Ver posted “Bitcoin vs Monero” in the Monero reddit a few hours ago:”Bitcoin is up 24% in the last 6 months, but Monero is up 428% in the same period.Bitcoin is up 93% in the last year, but Monero is up 1,720% in the same period.”https://www.reddit.com/r/Mo…

  6. Michael O'Rourke

    I believe it’s likely narrative driven speculation with India/Venezuela/Segwit news lately.

  7. Dennis Mykytyn

    Fred, I bought $2k of bitcoin after you posted about Coinbase, in September 2015. I think that was my buy limit with them at the time. Totally forgot about it, just looked it is now worth $7.2k. Thanks!I added $2k of ethereum in October for the hell of it, now worth $1.2k.Which brings up an interesting question, why is bitcoin soaring and ethereum plummeting?

    1. Ronnie Rendel

      you just (partially) answered my previous question. Thanks

    2. fredwilson

      Ethereum got ahead of itself, like most things and is going throigh some challenges right now

  8. Ronnie Rendel

    Can you short bitcoin (sell without holding the underlying)? If so, where do you get both the “market” and “transactional” data?

  9. Kimberly Trautmann

    Bitcoin isn’t just speculative anymore – peer to peer transactions are increasing exponentially in some countries. A bit out of date (from last month) but a nice snap attached. https://uploads.disquscdn.c

    1. fredwilson

      Why doesn’t that show up in the transaction data I posted?

  10. pointsnfigures

    Trump! (kidding) went to ycharts.com and made this chart: http://j.mp/2hMs5v8 It looks like a run away freight train compared to a lot of other markets. I compared it to $SPY(S&P 500), $QQQ (Nasdaq) $GLD (gold), $TLT (US Treasury Index) $UUP (US Dollar index), $FXE (Eurocurrency Index).Bitcoin doesn’t have close to the liquidity of those other instruments, so that could be part of the explanation. When buyers come in, they can move the market (conversely, same with sellers)Bitcoin also doesn’t have the depth of ecosystem the others have. No credit markets to speak of and no options. Exterior markets can act as headwinds sometimes.The big pools of capital aren’t playing here big yet either. Prime brokers and big hedgers selling into rallies can often dampen them.I read somewhere that a lot of big players sold at $780. Sometimes when that happens markets pop through and make them look bad. Smaller players that followed often reverse and try to get back in, fueling the rally.Agree, with other commenters. Bitcoin not going away. This might be the coolest thing I have seen regarding blockchain yet giving you an inkling of how big it could be: http://www.afr.com/technolo

  11. RichardF

    Dunno but the Winkelvoss bros Tim Draper and the rest of the 1% must be pretty happy

  12. Matt Kruza

    People getting money out of china. And also bitcoin is small, like pathetically small. Somewhere around $15 billion total, gold is around 8 trillion, worldwide financial assets 250-350 trillion with about 30-40 trillion in china alone, so bitcoin is so so small of an anthill

    1. William Mougayar

      Yes, but everything starts small usually, until it’s not anymore. I remember when we celebrated $1 Million in Internet commerce. Now it’s 1.3 Trillion per year.

      1. RichardF

        I hope it remains small, unlike a fiat currency the biggest holders of the currency are individuals with their own agenda.

        1. William Mougayar

          True, but it is going to get bigger. It’s going to be like an alternative currency that is very global and has no (to very low) transaction barriers.

      2. Matt A. Myers

        Biggest problem with Bitcoin is it’s not acting as a transactional layer when the earlier of an adopter you are, the more value you have gained simply because of owning it – because of demand increasing its price. Email didn’t work that way. The earliest email accounts aren’t worth more; domains, as they’re limited, had a bit of this market effect – but it’s still different. Until this unfair part of blockchain trying to be used as a transactional layer is fixed, I really hope it doesn’t gain traction – people of course who own a lot of Bitcoin can of course put an anonymous hit out on someone, paid in Bitcoin, to take out the people opposed; it’s usually easier to incentivize policy makers to make policy that’s not good for their people but help line their own pockets.

    2. Twain Twain

      Global OTC was $544 trillion in H1 2016. Total AuM for 2015 was $71.4 trillion.Ok, 21 million Bitcoins at $883.1 and gold is $36.4 per gram today.LSD — $3,000 per gram. …Plutonium — $4,000 per gram. …Painite — $9,000 per gram. …Taaffeite — $20,000 per gram or $4,000 per carat. …Tritium — $30,000 per gram. …Diamond — $55,000 per gram. …Californium — $25-27 million per gram. …Antimatter — $62.5 trillion per gram.Will it get higher than LSD?

    3. fredwilson

      I agree with your point but not the use of the word pathetic.

    4. Girish Mehta

      Its very, very small. Thinly traded/less liquidity compared to other markets…you will see massive spikes (and the reverse). Like I commented here a few days back, its returns are not that of asset that yields investment return, but a trading/speculative commodity.But if you are into it, and have been for the past 5-6 years, you feel like its gotten really, really big. How far we have come.An ‘outside-in’ view gives a different perspective.Of course – the insiders are seeing the future, and the outsiders are clueless until it is too late. It has always been thus, except all those times it isn’t.As of today – it is very, very small.

      1. Tom Labus

        It’s very good for the stage it’s at today. TWTR is $11.6B and has immense cultural impact.

        1. Girish Mehta

          Hmm…how do you compare the market value of any company (not just Twitter) with Bitcoin ?

          1. Tom Labus

            Total value but it’s not science with a thinly traded market like Bitcoin. It could be half of today’s value or double in 24 hrs. But not all value can be calculated.

    5. Matt A. Myers

      Could be any number of factors including new people trusting it as a way to launder money.

  13. Jim Peterson

    “My guess is this is speculation driven”It sure looks like it based on the volume chart. Hopefully late entrants are only using fun money.

  14. popbijoux

    Trump will deregulate on a huge scale and bitcoin will be the darling playground of some of it. Never bought into bitcoin, personally, but I can see how massively it will grow in the coming years.

    1. Joseph K Antony

      Given Bitcoins increasing stability, acceptance and versatility , its not unthinkable Bitcoin progressively replaces gold as the global investment of last resort. The Trump effect and increasing global uncertainties makes it look inevitable.

  15. William Mougayar

    One theory is that Bitcoin is seen as a proxy to the US economy, and most of the Buy demand is coming from foreign sources. Regardless, BTC is solidifying itself as the reserve cryptocurrency of choice. As a currency App, the Bitcoin blockchain is nailing it, but I’m not sure it’s doing so well in the software application side, outside of currency related use cases.

    1. awaldstein

      why is it necessary to call this the “the Bitcoin blockchain”?

      1. Girish Mehta

        Actually I have also started to refer to it as “the Bitcoin blockchain” over the past couple of years.Its not elegant, but its correct and relevant.Maybe somebody will come up with a better term.

        1. awaldstein

          Thanks–i understand this of course as I follow Williams posts.Such literalism in language honestly I’ve never seen in any emerging technology.Crazy–personally I care less about being specifically correct and more about capturing the essence and the story of what I work with.Correctness is less interesting and important to me generally.

  16. mikenolan99

    I’m all cool with bitcoin and the underlying technology. As a speculative investment, I’m not a fan. Didn’t a very wise man name Fred once say: “I’m not a fan of gold. It does not produce any income. It is not a productive asset.”Fluctuating valuations of bitcoin or any other value based currency {gold} that does not ebb and flow with economic growth is a investment game too complicated for me….

  17. creative group

    CONTRIBUTORS:We wanted to view the speculation that is viewed as facts when currency or equities are moving up or down without support from fundamentals, scandal, exits, etc.Similar to what occurs after the Stock markets have closed the Genie’s let everyone know the why after the fact but never before the opening bell.When Bitcoin returns to $10.00 let’s us know. Bitcoin has been pushed to this enormous price with no true fundamentals to back it. Those with a very vested interest will comment otherwise. Just follow the original major players and the tea leafs will become clear on those who they considered legimate to make the currency mainstream from the depths of darkness. (A title recommended when Bitcoin was around $250 Nathaniel Popper’s Digital Gold-Bitcoin and the inside story of the Misfits and Millionaires Trying to reinvent Money.)DISCLOSURE: We are long on the Blockchain technology but a realist with our money. Any currency that can be manipulated by any entity that controls over 50℅ as it’s flaw in valuation is one to be viewed with caution. Pushback is expected because the profit margins and skin in the game is very high.

  18. creative group

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  19. creative group

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  20. Tim Lea

    Think it is a combination of trading and fundamentals :1) speculation – undoubtedly this rise is driven by traders – especially given the price has just gone through a key point of resistance 2) the halving in July has meant reduced supply coming through3) BTC represents the digital gold standard – a safe haven when economic challenges are around – eg with Brexit it rose 15%, when DT got in it rose by 4.5% – with general economic uncertainty its role as a safe haven will become increasingly imortant4) BTC represents the reserve currency of the cryptocurrency space – to get into the new ICO’s (Initial Coin Offferings – the IPO’s for cryptocurrencies) you typically need BTC to buy in5) Currency restrictions in China undoubtedly play their part given 80% are mined there and c 75% traded there6) Many use cases/pilots are being seen globally that are testing via the BTC network.Whilst not investment advice, undoubtedly the trend is on the up and the fundamentals are looking strong – but all it needs is for a major hack or loss and the trend will be disrupted…(In my book, Down The Rabbit Hole (completed in October 16) I predicted BTC to exceed $1000 in 2017 – the way this is going I could be wrong – it could be 2016!

    1. Twain Twain

      Thanks, very insightful.

      1. Tim Lea

        Thx for your kind words…

  21. creative group

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  22. Joseph K Antony

    Its because of India’s floundering demonetization program, which was announced on November 8th. Unofficial converters of old currency into bitcoin are now mushrooming surreptitiously in major Indian cities. As the world’s sixth largest economy , an estimated 62% of its income is unaccounted money – which has to be converted before December 30th. So expect a further spike in Bitcoin prices over the next few days.See this article. http://indiatoday.intoday.i

    1. Joseph K Antony

      ..Bitcoin is approaching new highs for the year because of India’s demonetizationhttp://qz.com/859661/bitcoi…

  23. Fran Strajnar (@techemist)

    To answer the question – Access MaturityBoth institutional and retail access has matured a great deal and more and more capital is starting to treat this Asset Class as viable and ‘safe’ as it’s largely been lifted out of the shadows.After 8+ years Bitcoin is still not dead. In fact it’s proven a resilient store of value and rails for various application and money transmission solutions.From a macro view, the geopolitical instability as well as the rampant currency wars, have turned bitcoin into a viable hedge for a growing number of 3rd world countries which are clamping down on high cash denominations or are experiencing hyper inflation.Couple this with various infrastructure coming out of the lab and into the market, such as next generation on/off ramps, structured and exchange traded products already live, like the 250m Euro ‘Bitcoin ETI’ (tracked against the performance of our Bitcoin Liquid Index), traded on Deutsche Börse, as well as the US bitcoin ETF’s making their way through the SEC; all paints a positive picture for bitcoin.Here’s the latest technical analysis we printed an hour or so ago: http://bravenewcoin.com/new…~ F

  24. jason wright

    the existence of a SegWit fix is reason to be concerned and not confident. it signals a red flag about the tech’s ability to scale, and flaws in the architecture. SegWit as a reason to be bullish seems contradictory to me.

  25. Swatick Majumdar

    I believe it’s China for most part and also India because of demonetization.

  26. Twain Twain

    Lol, quite.This is why humans are more valuable than anything else in the Universe, by the way.We’re made of matter and antimatter.

  27. Matt A. Myers

    What’s with all of this spam recently on AVC that’s not getting reported? Need more mods Fred?