If you had bought a single bitcoin 5 years ago, you would have paid $5.00. That same coin today would be worth a whopping 30,000% more as bitcoin has broken all previous highs and surged above the $1,500 mark late yesterday.
At time of writing, bitcoin is hovering around the $1,580 price point, but considering its bullish week, it would not be surprising if by the time you read this it had smashed through $1,600.
Data sourced from Cryptocompare.com highlights bitcoin’s steady price growth over the last month.
As always is the case when bitcoin experiences a significant spike in price and trading, many look to uncover the driving forces. We know for certain there is a link between government-led monetary policy changes or political instability and the price of bitcoin. It has been seen many times before where there is a inflow into bitcoin when economies are under threat. It is, therefore, refreshing to see that the current bull run is being predominately driven not by turbulent circumstances, but rather the news of Japan legalising bitcoin as legal tender in their country from April this year. In fact, approximately 40% of trades in the last 24 hours (and up to 55% during the last week) were conducted in Japanese Yen, confirming a high level of demand.
Naturally, such a law comes with a huge administrative process. Japan’s Bitcoin exchanges are now subject to increased regulation, and in particular, the same rules governing banks and financial institutions. Strict anti-money laundering (AML) and Know Your Customer (KYC) requirements also come into play, as do annual audits and meeting of stated capital and cyber security protocol. Accounting frameworks and systems also need to be adjusted to be accommodate the idiosyncrasies of cryptocurrency. These processes can take some time to come into effect, and this is why we believe we’re only now seeing a massive inflow, as organisations are better equipped and institutional money starts coming into play.
Japan’s decision to recognise bitcoin as legal payment is another giant stride forward for the digital currency, as well as other cryptocurrencies, and will no doubt pave the way for other progressive governments to do the same. The Bitcoin ecosystem benefits from an increase in users and demand, and in turn, we reach just that bit closer to the moon!
Note: To the moon is an industry term used to describe, encourage and even ‘celebrate’ bitcoin’s price moving in an upwards direction.