The news of bitcoin’s record-setting price arrives in the wake of “potential global uncertainty” related to the policies and leadership of US President Donald Trump, Bloomberg reported. Analysts have also observed that Trump’s emphasis on cutting regulations could include rules governing bitcoins.
On Thursday, the bitcoin closed in New York at $1,164.10. The previous peak was reached in November 2013, when the price topped $1,137.
Venture capitalist Marc Andreessen has described the event as comparable to the internet in its early days, a classic chicken and egg problem faced by any new technology: it’s not worth much until it’s worth a lot. Unlike the fiat currency system used by national governments, “the virtual currency is not beholden to any government entity,” analyst Grant Ferowich wrote in a blog post. “Bitcoin thus overcomes the public-private divide characteristic of payment systems in the US.”
Still, “without volume” of usage, as in using bitcoins to get a haircut or groceries, “bitcoin remains a subcurrent,” he said.
The digital currency plummeted to a low of $789 in early January, evidencing the volatile nature of the cryptocurrency’s price. It has a long way to go before it can be considered a “mainstream” currency, Nicholas Colas, chief market strategist at Convergex said on CNBC Wednesday.
Since the virtual currency is located everywhere and nowhere, giving the coin its “decentralized” feature, governments can only hunt down local bitcoin exchanges and service providers. But in China, Turkey, Russia, and Venezuela, for example, bitcoin markets have buzzed with peer-to-peer trading, Bloomberg noted. “Even if a government shuts down every bitcoin node in its country, a bitcoin user can still transact as long as a single node is accessible overseas.” Such a financial architecture “puts regulators in a tough spot,” writes Elain Ou, a blockchain engineer at Global Financial Access.
The recent bitcoin price-rise is the longest in its history, according to research site CoinDesk. With Trump’s promises to relax Dodd-Frank regulations, bitcoins may become easier to use and build businesses around, analyst Mark Bunger of Lux Research Inc. told Bloomberg. Regarding the recent upswing in bitcoin value due to uncertainty in financial markets, Bunger asserted, "This is all Trump and the ripple effects of Trump."