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On May 26, the price of the bitcoin began to surge, hitting a value of $467.50. Throughout the weekend, the currency continued its dramatic trajectory, spiking at $570 before settling around $530. This amounts to a sudden increase of 21% in the midst of a consistent, if low, period for the currency. While these values are far below bitcoin's one-time peak of $1,151, they are the highest prices the digital currency has reached since 2014. That same year marked a heavy blow for the bitcoin, bottoming it out at low rates that remained in force over the past year. Now, investors are indicating promise in the currency once again: Over the weekend, daily global transactions equated to $134,056,000, with over 15 million bitcoins in supply.
The definite source of this increase is uncertain, but fingers are pointing to China. The country is already a major player in the market: its two biggest bitcoin exchanges, Huobi and OKCoin, together amount for 92% of global bitcoin trading. The bitcoin has proven popular in China since the currency does not abide to a government system and can be easily traded across borders. Since commerce is fiercely policed in China, the clandestine nature of bitcoin trade is frustrating to government officials, while proving fruitful to investors. The Chinese government has often put out measures against unpatrolled trades, although it has not yet figured out how to deal with bitcoin.
In addition, the devaluation of the yuan appears directly correlated to increased bitcoin buying. China's continued economic slowdown has put citizens at unease, as some fear further deflation. Thus, the bitcoin is seen as a potentially frugal alternative asset, as several investors trade their yuan for bitcoin as trade security. Both Huobi and OKCoin have seen increased amounts of sign-ups and orders over the past few months; all of this heightened activity may have been ultimately responsible for the value push. It is clear that China's influence on the currency is key, however, it is yet to be seen if the currency's profitability remains sustainable. Many global investors have predicted 2016 to be successful year for the bitcoin, and this recent spike may be just the tip of the iceberg.
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