Thursday morning, bitcoin surged past the $5,000 level pushing this year’s gains to more than fivefold, and sending shares of hardware companies linked to digital mining soaring.
Bitcoin was trading at less than $1,000 last December. Since then, the cryptocurrency has dodged tightening regulations worldwide, warnings of fraud and eventual price collapse from big names like JPMorgan Chase & Co.’s Jamie Dimon, and feuding factions splitting the underlying blockchain in August.
But as blockchain technology and cryptocurrencies have continued to dominate headlines, Initial Coin Offerings (ICOs) with little substance have exploded, and hacks and other technical issues have caused some investors to lose thousands, bitcoin has been increasingly seen as the cryptocurrency world’s safe haven.
This latest leg higher is being partly driven by increasing institutional interest from the likes of Goldman Sachs, and even Dimon’s JPMorgan Chase as this optimism for bitcoin has grown.
“This record is an exciting milestone and [a] sign of market confidence in the outlook for bitcoin and the underlying technology, said Iqbal Gandham, a managing director at eToro, a social trading network. “We expect many more milestones like this to come.”
Internet searches for bitcoin have surged as well. SEMrush, a data analytics company, has found that the price of bitcoin has a 96% correlation with Google searches on the cryptocurrency, suggesting that growing interest is driving demand.
So how far can bitcoin go?
Ben Kumar, a money manager at Seven Investment in London and an investor in bitcoin, thinks we may see it at $10,000 in the near future. “Everyone seemed to agree that once it broke through $5,000, the sky is the limit. I wouldn’t be surprised to see it double from here in a very short space of time,” Kumar said. “There’s a long time to run before people get tired of chasing the next big thing.”
But don’t expect that road to be smooth. Bitcoin’s volatility is still 10 times that of gold.