Bitcoin has been up nearly 40 percent in the last three days.
The bitcoin price jumped by more than a fifth to above $490 on Wednesday, in the latest spike for the virtual currency created in 2008 by an anonymous mathematician.
Market players refer to a pair of reasons for this impressive ascend.
Earlier in 2015, Gil Luria, an analyst at Wedbush Securities, sent a note to clients in which he launched an outperform rating on the Bitcoin Investment Trust, or GBTC.
In his opinion, there is a prospect that bitcoin and its associated
blockchain technology will disrupt the traditional
financial infrastructure over the next few years.
"We believe the value of the bitcoin currency (BTC) will benefit from this trend and therefore are initiating coverage of GBTC with an OUTPERFORM rating and $40 price target."
There is a considerable demand coming from China, says Barry Silbert, founder and CEO of Digital Currency Group. For the past two weeks, bitcoin has been trading at a 5 to 8 percent premium in China. There's also been mounting talk about Bitcoin (and its underlying technology) being useful in professional financial services, which he thinks will have a very positive impact.
However, as the Financial Times explained earlier, the abnormal demand from China was caused by a wave of Chinese testimonials for a “social financial network” called MMM, which bears the hallmarks of a pyramid scheme.
The news agency said that new members of MMM have to purchase bitcoins to join the scheme, which was created by Sergey Mavrodi, a former Russian parliamentarian since jailed for fraud.
The bitcoins are sent to other members of the network as “mutual aid”. Participants are promised a 30 percent return per month, with bonuses for referrals or publishing testimonials online.
