Bitcoin is closing in on its all-time high as regulators in some of the world’s largest economies have warmed to the digital currency.
A single bitcoin BTCUSD, -0.67% went for $1,305.93 in recent trade, according to the Coin Desk Bitcoin Price Index, which aggregates pricing data from some of the world’s most popular exchanges. The index briefly reached an-all time high at $1,325 on March 10, just hours before the Securities and Exchange Commission announced that it had decided to reject a proposal that would’ve led to the creation of the first bitcoin exchange-traded fund.
Bitcoin has climbed more than 30% so far this year, partly due to its increasing acceptance by regulators in some of its largest markets, including the U.S., China, Japan and India, said Charles Hayter, founder and chief executive officer of CryptoCompare, a website that provides data and analytics about the digital-currency market.
A contentious debate over how best to expand the processing power has largely faded into the background in recent weeks. This has also helped benefit the price by quieting speculation that the rift could eventually split the bitcoin network in two.
Some cryptocurrency market experts have pegged the most recent move to the SEC’s announcement that it would review its ruling on the bitcoin ETF, spurring hopes that an ETF could become a reality sooner than expected.
After years of trying to marginalize bitcoin, Chinese regulators appear to have reached an understanding with the local bitcoin community. Earlier this year, they required the largest local exchanges to temporarily halt withdrawals so they could upgrade their anti-money-laundering controls. They also required the exchanges to begin charging transaction fees to crack down on market manipulation.
Russian authorities exhibited a similar change of heart; Russia’s Deputy Finance Minister Aleksey Moiseev said the government could legalize bitcoin and other digital currencies by next year.
A Japanese law that created a regulatory framework for bitcoin went into effect in April, clearing the way for large institutional investors to enter the nascent digital-currency market.
But Chris Burniske, blockchain analyst and products lead at ARK Invest, believes there’s another factor driving bitcoin’s gains: Last year, the rate at which new bitcoins are created was cut in half during a phenomenon known as “the halvening.”
The last time this happened, in 2012, the price of a single coin rose by more than $1,200 over the following year.
“It seems like these supply contractions have a delayed impact on the price of bitcoin,” he said.
To be sure, some believe bitcoin’s advance over the past few days is partly the result of distortions created by Bitfinex, historically one of the largest sources of dollar-denominated trading volume. Bitfinex customers have scrambled to buy coins at a loss just so they can move their assets out of their trading accounts after the exchange suspended dollar withdrawals, allegedly because of complications with its banking relationships.