Bitcoin, the digital currency, has hit a record at $265 on the BitStamp exchange. So what is the factor that has driven this all-time surge of the digital currency? Well, wider acceptance of Bitcoins is seen as one of the major contributing factors for the upsurge.
"Bitcoin is making a new high this week, breaking through the spiky bubble levels of April in a pretty controlled and orderly manner," writes ConvergEx Group chief market strategist Nick Colas in a note to clients this morning. "What gives?"
For the uninitiated, Bitcoins can be used to pay for services and products on the Internet and has seen a phenomenal rise in 2013. This is primarily due to increased trading activity.
On Thursday, November 7, Bitcoins were trading at $265 each on BitStamp, where they are traded for other currencies like dollars and euros to name a few. Bitcoin's previous record is $259.34 on BitStamp in April this year.
The surge in Bitcoin value comes nearly a month after the "Silk Road Hidden Website" where individuals could purchase drugs, guns and illegal goods via Bitcoins was shut down.
The value of the digital currency saw a fall post the site's shutdown. However, per Ugo Egbunike, director of business development at IndexUnivers, Bitcoins have become popular in markets like China (displacing Japan, America and Europe in demand), which has given the virtual currency a fillip.
"I thought Silk Road is going to do some damage to the price," said Egbunike. "But with BTC China buying this up -- they seem to have picked up the slack."
Per Colas, BTC China is the primary market and the world's largest Bitcoin exchange with New York also an important player when it comes to Bitcoin demand.
"Our sources in the Bitcoin community also agree that Second Market, the New York-based business best known for trading pre-IPO company stock, has become a major player in demand for Bitcoin. Earlier this year they started the Bitcoin Investment Trust, an open-ended product to buy and hold Bitcoins. There's no way to know how much Second Market has purchased on behalf of its clients, but it must be a popular offering - the banner ad on their site for the trust occupied the top third of their front page," per Colas.
According to a report by the Federal Reserve Bank of Chicago, there are close to 30 transactions per minute at an average of 16 Bitcoins.
