Bitcoin rises 152% this month, reaching a new high of nearly $1 billion

The continuous rise of U.S. stocks this month is surprising, but Bitcoin, the electronic currency circulating on the Internet, is obviously more vigorous.

Bitcoin already performed well against the U.S. dollar in 2012, rising more than three times. This year, it has been even more impressive.

Bitcoin rose 57% in U.S. dollar terms last week. As of March 28, Bitcoin has risen 152% this month, with its market value approaching $1 billion for the first time.

Since Bitcoin is not a currency issued by any country, is not controlled by a central bank, and does not represent precious metals or rare earths, it is just an electronic currency that can be exchanged for goods and services. Such a total value can be called a milestone .

Paul Ford published his opinion in Bloomberg Businessweek and predicted that Bitcoin may become the last safe haven for the global economy .

He believes that Bitcoin can be arranged flexibly and arbitrarily like many financial instruments, just like CDS provided by banks. But it is more interesting than those instruments because using Bitcoin does not require trust in an institution, but trust in an idea.

Bitcoin is mined by "miners" to create new coins. Below is the estimated operating profit of Bitcoin mining from last year to date. In December last year, the mining rate of new Bitcoins was halved. Bitcoin mining is partly intended to create deflation. Currently, profits have returned to the peak level in the middle of last year.

One popular explanation for the rise in Bitcoin is the Cyprus crisis. Some people have noticed that the price of Bitcoin has risen by 87% since the news that Cyprus intends to use bank deposits for financing came out. On the 16th of this month, the Bitcoin to US dollar exchange rate was 1:47, and now it has risen to 88.

Zachary M. Seward, a former Wall Street Journal reporter and senior editor at Quartz, believes that a more reasonable explanation is that Bitcoin is experiencing a " demand crisis ," in which increasing demand pushes up the value of the currency.

It is called a "crisis" because as Bitcoin appreciates, some holders hope to get greater returns, so they are reluctant to sell, reducing the actual supply, further pushing up prices and attracting more interest.

Another way to understand the public's interest in Bitcoin is to look at the number of posts on Twitter discussing Bitcoin.

The chart below shows how the value of Bitcoin has increased and decreased this month in relation to the interest of Internet users. Compared to the steady rise in value, the fluctuations in interest have been greater and the path has been more tortuous.

In short, if you are a speculator, when Bitcoin's media exposure is getting higher and higher, you should still think about letting it rise to $100 per Bitcoin before selling it.

However, if one believes that Bitcoin can truly serve as an alternative currency and a safe haven from monetary unions and fiat currencies, such news is not so encouraging.

If you are the one who created Bitcoin, it is still worth celebrating. Today, 1 Bitcoin is equivalent to 75-95.7 US dollars.

But Seward said market forces often ruin good ideas.