Bitcoin price: what’s behind the cryptocurrency’s bull run?

Bitcoin’s price reached a nine-month high over the weekend as the virtual currency’s strong start to 2019 continued.

The value of the cryptocurrency surpassed the $7,000 (£5,380) mark early on Saturday, before peaking at $7,475 (£5,739) the following day, according to ranking website CoinMarketCap.

While prices briefly dropped to below the $7,000 threshold yesterday afternoon, the upward trend continued into the early hours of this morning, the site reports. Bitcoin values were at $7,020 (£5,395) as of 9.30am UK time.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Bitcoin is “on a tear” after trading nearer $5,000 (£3,483) at the start of the month and prices have “more than doubled” since the December, says Bloomberg.

Although this bull run will be welcomed by bitcoin investors, the virtual currency is still some way behind its record high of nearly $20,000 per coin achieved in December 2017, the news site notes.

Still, this comes as a surprise given that the cryptocurrency market has endured a turbulent week.

Binance, one of the world’s largest digital currency exchanges, was attacked by hackers on Tuesday, resulting in about 7,000 bitcoins - equating to about $42m (£32.3m) - being stolen from the platform.

Though the number of stolen coins was far from insignificant, the Chinese-based exchange announced that they accounted for only around 2% of the firm’s holdings in bitcoin and that it would be compensating any investors who had been affected.

Despite the hack, investors seemed unfazed and bitcoin values continued to climb throughout the week.

What’s causing the bull run?

Bitcoin’s rising values may be a sign that cryptocurrency investors are using the “digital asset” as a “haven in times of uncertainty” following increased tensions in the ongoing US-China trade war, the Financial Times says.

Last week, the US confirmed that it would increase tariffs on $200bn (£154bn) worth of Chinese goods from 10% to 25% after Donald Trump accused the country of backtracking on commitments made during negotiations, The Daily Telegraph reports.

This resulted in a pull back from the stock markets, seemingly prompting investors to move their money back into bitcoin, the FT notes.

What about bitcoin’s rivals?

Bitcoin gains often send waves through the cryptocurrency market given that it reignites investor confidence in virtual coins.

Ethereum, for instance, has risen from a low on Friday of $171 (£131) per coin to today’s high of $188 (£144), CoinMarketCap reports.

Ripple, which sits third in the cryptocurrency market rankings behind ethereum and bitcoin, has also seen a significant boost. Prices for the banking-focused digital coin sit at about $0.32 (£0.25) today, up from Friday’s valuation of $0.29 (£0.22), the ranking site adds.