Why?

As of today, May 25th Bitcoin has gone up over 100$ in the past week. Why is Bitcoin following such an uptrend after months of trouble and decline. Some argue that the price has been steady for long enough and now investors are hungry and are looking to profit, other’s are saying that more people are finding out about Bitcoin and want a piece of the currency. Despite the occasional high-profile business failure, the fundamentals of bitcoin haven’t changed – it’s still a decentralized peer to peer value transfer protocol and asset register. People want a piece of that.

Another interesting idea is because of the trouble of Ukraine + Russia which caused the rubble and the money market to go down. This has caused an increase in the price of gold. Here is the chart showing the recent price of gold.

As you can see right around May 22nd is where the price had a sudden surge. This was also right about the time that Bitcoin started its run up to over $560 which is it’s current price. Because the money market was down, this led to the uprising of the oil, gold, and bitcoin markets.

Another idea is that Bitcoin finally has a voice in congress. Brett Stapper, the co-founder of Bitcoin investment fund Falcon Global Capital, filed paperwork to lobby members of Congress on issues relate to cryptocurrency. This company is the second to formally declare that it is lobbying for Bitcoin, right after MasterCard that had 5 lobbyists that focused on cryptocurrency last month.

The fact that Bitcoin now has a voice in Congress and is also recognized by the IRS means that Bitcoin is not going away. The main reason for last year’s crash was due to the fall of MtGox, the involvement of China (which inflated prices), and for the trouble with the federal government and Silk Road. However, now that the dark past is behind Bitcoin and merchant adoption is taking place, there is no limit.

Furthermore, there are events happening right now on May 25th in Europe relating to Bitcoin. You can watch the live stream HERE.There were multiple events in Amsterdam  (including DNB – the Dutch FED – attending and speaking). Also Bitcoin events are hosted by the ABN Bank (A Large dutch bank) and the ING Bank (Another big bank) of who’s managers are speaking on stage. Mr Jan Kees de Jager was there. He is the previous Secretary of the Treasury of the Netherlands. He was not negative about Bitcoin (but warned about its use due to volatility) and even admitted he owned some Bitcoins of his own.

The biggest benefit Bitcoin has is it’s Merchant Adoption phase. We have seen new corporates lean towards Bitcoin and start accepting it. We have seen huge developments in development platforms for Bitcoin and other coins, and we have also seen the strength of the blockchain.

How long will it last

As a disclaimer, the following will be pure speculation. One member on Reddit said:

Remember, we’ve had multiple bubbles in the past. Experience tells us that there should be a few months of slow rise before the next big bubble. I believe this is psychologically driven: even with good indications, people need a while to recharge before jumping on a bubble. This is too early, which is why I think it’s more of an aftershock than the next big bubble.

This may be true, from experience we HAVE seen that Bitcoin needs time to recharge before snowballing into a new bubble, however, has enough time passed to go into the multiple thousands as everybody claims we will? If enough people believe it, we certainly can go up a lot, but it won’t be sustainable. And the bigger the money, the smarter it tends to be, which in turn doesn’t mistake a bubble for a ball or a ball for a bubble. If you do the former, you will sell to soon – It will keep rising, and the latter you’ll buy too late -it will pop. We still might be in the ball phase- mini corrections all the way up to bubble phase, but that bubble threshold is rising too (with every piece of good news), so it is hard to put a value on the bubble or the correction – whichever it is.

Some view 2013 as the year where Bitcoin received global exposure. In 2014 Bitcoin will lay the foundation for a more stable economy. This should cause the price of Bitcoin to readjust and eventually stabilize. Right now we are either in a bubble, or in the process of price readjustment. As long as the combo of the great news continues Bitcoin should see an upward trend.

A small tip

Remember the last Bubble which burst around black Friday? I was able to sell right at the peak and not because I got lucky. I was able to sell at $1100 because I set a selling mark in my mind and decided that when Bitcoin will reach that price I will sell no matter what. You cannot be too greedy and you do not want to be scared because you will either miss the peak or will sell to early.

If you are a Bitcoin trader (hopefully you are not trading on Bitstamp) and are looking to make the most profit off this or the next bubble just set a price where you will sell your coins as soon as Bitcoin reaches it. Do not make it an emotional number like 700, 1000, or 1500. But instead make it abit under those round numbers. Lets say you will be happy to sell your coins at $700. Set your selling point at $683 and as soon as Bitcoin reaches that price on your exchange simply sell and do not look back. One of two things will happen. You will either sell too early, or sell right at the peak. You cannot be too greedy because even if you did happen to sell too early you still know that you have made profit and can wait out the bubble and rebuy again. It is better to kick youself for selling to early and making X amount, vs kicking yourself for not selling earlier and loosing X amount.

In the meantime let’s hope that Bitcoin will break the $1000 mark in the upcoming weeks and we can hit new record highs in the upcoming months.