The price of bitcoin has reached a new all time high today, touching $2000 on the Bitfinex exchange. This move puts bitcoin up +48% for the month and +106% YTD. There is no other asset class that can touch this performance.
What’s behind the move?
1.) Political uncertainty in the country with the world’s reserve currency (that’s the US for those of you who have not been reading Russian newspapers)
-bitcoin offers portfolio diversification to those worried about the political chaos in the US leading to a dollar drop
2.) Japanese investors piling in
-Japan enacted a law in April regulating exchanges and opening the door to institutional and retail investments in digital currencies.
-Bitcoin trading in now dominated by the Japanese Yen with 43% of the daily volume; followed by US Dollar at 30% and Chinese Yuan at 7%.
3.) Two big conferences next week in NYC
-investors are buying ahead of the conference in anticipation of big news.
Does This Parabolic Move Make BK Nervous?
As much as BK believes in the long term prospects for digital currencies, anytime a market goes parabolic, alarm bells go off for the skeptical trader in BK. Bitcoin, Ethereum and other digital assets solve a lot of real world problems, but they do not solve the problem of human greed and fear. Digital currencies are subject to the same laws of human behavior that drive every other asset class.