The price of Bitcoin has broken the $500 USD mark, surging past the November 2015 high, and appears to be climbing higher amid some impressive volume.
Also read: Bitcoin’s Next Adoption Phase Imminent as Public Interest Surges
China Boosts Bitcoin Price
Bitcoin holders rejoice! Following many weeks of relative stability and hovering around $450, the price of the world’s first cryptocurrency has shattered the previous yearly record high set back in early November 2015 when it flirted with the $500 mark.
Bitcoin is currently valued around $504 USD at press time, a spot price not seen since August of 2014.
The reason for this impressive surge could be largely attributed to a weakening Chinese Yuan and capital controls imposed by the government. Chinese themselves are known to convert fiat into gold, offshore real-estate, and bitcoin as a way to preserve wealth and get around capital restrictions. It’s also no secret that Chinese bitcoin exchanges compose a lion’s share of all BTC trading, where the upward price momentum is even more “striking” as the IBTimes notes:
On Chinese markets, the price spike has been even more striking, with one bitcoin selling for $499 at the time of publication on Chinese bitcoin exchange BTCC, which also reports a surge in the volume of bitcoin being traded for Chinese yuan Friday morning as investors seek to circumvent foreign exchange restrictions placed on the currency by the government.
Moreover, since the official spot price crossed the $500 mark, there are reports of BTC hitting the CNY equivalent of $542 on Chinese exchanges.
@YourBTCC @cryptocoinchart now up to $542 equivalent USD #bitcoin #bitcoinprice
— Crush The Street (@CrushTheStreet) May 28, 2016
Interestingly, the exchange price differs depending on the fiat currency. This is very indicative of lopsided demand, specifically in CNY.
Bitcoin price index https://t.co/o7UcHJUhC6 #USD #EUR #CNY #GBP #RUB pic.twitter.com/EKQrg2IAPX
— WorldCoinIndex (@WorldCoinIndex) May 28, 2016
Meanwhile, others are also speculating whether this bull run is being fuelled by the looming Bitcoin reward halving, i.e. the rate at which bitcoin are created of bitcoin’s will be halved, which will occur sometime in July.
#bitcoinprice effect of halving ?
— Bitcoin of America (@BTCofAmerica) May 27, 2016
‘Congested Network’ Concerns
Amid the surge in price and volume, Bitcoin investor Roger Ver noted the record “congestion” of the network, urging the community to increase the block size.
Today is the second most congested day in the entire history of Bitcoin. We need more capacity now! pic.twitter.com/qYf00M3Zci
— Roger Ver (@rogerkver) May 27, 2016
If the current 1 MB block sizes are filled up by the increasing number of transactions, the network could become overloaded and users could experience delays and even have their payments stuck in limbo indefinitely. Proponents of a block size increase fear this would reduce confidence in the Bitcoin network, driving the price lower and causing users to migrate to a different coin for their payment needs.
However, other users have been reporting that they are currently not experiencing any transaction delays.
@rogerkver are you experiencing delays or failed txs? I’m not and i do at least a few txs per day, often more. no probs. just lucky?
— Kolman Soifer (@KolmanSoifer) May 27, 2016
Though it’s still too early to tell, some prominent experts have predicted 2016 to be a breakout year for Bitcoin. Regardless, the infamous price spike in late 2013 — when it reached almost $1,200 — will undoubtedly be on everyone’s minds if the current BTC price manages to stay over $500.
What do you think is the real reason for the bull run? Are you experiencing network delays? Let us know in the comments section below!
Images courtesy of Twitter, oorayham.wordpress.com, coinmarketcap