Why Do Bitcoins Keep Rising in Value?

Banking, finance, and taxes

Published: November 6, 2013 7:50 am

Last Updated: November 6, 2013 7:51 am

The world of Bitcoin and virtual currencies is a strange one. Imagine an open source currency with a digital life and no real nation behind it. Then imagine that the price of the currency would double yet again in just over a month. This is the story of Bitcoin, and it feels a bit like deja vu all over again.

Bitcoin prices have effectively doubled since the beginning of October. The price had been stable for months but then rose from around $125 to $265 recently. Bitcoin’s prior high had been $266, but the Mt.Gox shows that Bitcoin’s new high is $270. At last look, the last trade was down at $263.11

The Wall Street Journal recently reported that a couple of Senate committees will hold hearings regarding policy on virtual currencies in the weeks ahead. Policing Bitcoin and virtual currencies generally comes with a reference of being able to be untracked for criminal activities.

A recent driver of the value of Bitcoin may simply be nothing more than more retailers accepting it at the same time that investors are interested again. If you will recall, we even recently highlighted a new Bitcoin trust from SecondMarket. In July we pointed out that the only thing as dumb as a Bitcoin ETF would be a gun ETF. Bitcoin’s rise in value is even on the heels of a summer Ponzi scheme warning from the U.S. Securities & Exchange Commission.

As reminder, there are accused flaws in Bitcoin. The market value of all bitcoins are currently close to $3 billion. Here is the one-month chart from the Mt.Gox website:

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