Bitcoin climbed above $3,400 to trade at all-time highs on Monday as investors gained confidence in the future of the digital currency.
Its price rose nearly 5 percent, to $3,451.86, up almost $600 from Friday’s $2,900 levels, according to CoinDesk. Bitcoin has more than tripled this year and has gained 18 percent in August.
“That’s what supports the cryptocurrency right now, confidence,” said Ronnie Moas, founder of financial research firm Standpoint Research.
“If there’s something that shakes people’s confidence in crypto then they will sell off. The further we get into this game the less likely you will get something like that,” Moas said. He said he’s “heavily invested” in digital currencies and in late July, he issued a report predicting bitcoin will reach $5,000 in 2018.
Bitcoin now has a market capitalization of about $56 billion. For comparison, General Motors has a market cap of $51 billion.
Bitcoin one-week performance
Most enthusiasts attributed the price gain to a relief rally after the relatively smooth split of the digital currency into bitcoin and “bitcoin cash.”
The currency split, or “forked,” on Aug. 1 after a minority of developers went ahead with their own upgrade proposal to improve transaction speed on the digital currency network. That upgrade, creating bitcoin cash, was incompatible with a more popular proposal called Segregated Witness, which the original bitcoin is set to lock in in the next few days.
“I think a lot of new investors were waiting on the sidelines until after the hard fork” into bitcoin and bitcoin cash, said Benjamin Roberts, co-founder and CEO of Citizen Hex, an ethereum-focused start-up backed by three Canadian venture funds.
“Now that it has happened with a favorable outcome (Bitcoin + Bitcoin Cash > Bitcoin), new fiat money is entering into the space,” Roberts said in an email. Fiat currencies include the U.S. dollar, the Japanese yen and the euro.
Bitcoin traded in Japanese yen accounted for nearly 42 percent of trade volume, up from about one-third in the last few days, according to CryptoCompare. About 26 percent of bitcoin traded in U.S. dollars, the site showed.
Bitcoin cash swung wildly in its first week from above $700 to below $300. As of Monday morning, the digital currency recovered from a weekend dip to near $200 to trade higher near $260, according to CoinMarketCap. That’s less than one-tenth of the original bitcoin’s record-high price.
Another digital currency, ethereum, edged up a quarter of a percent to near $269, according to CoinDesk.