After a Year in the Dumps, Bitcoin’s Price Stages a Rally As Usage Steadily Climbs

By John Stewart

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After languishing in the $200s most of the year, the price of the Bitcoin digital currency rallied this week, briefly flirting with the $500 level on some exchanges before settling in the high $300s by Friday morning. At the same time, Bitcoin usage, though still relatively rare, is steadily rising.

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Bitcoin’s surge, reportedly driven by speculators, saw the price spike nearly two weeks ago from $279 to $295, the first time it approached the $300 level since mid-July, when it briefly breached that milestone before tumbling into the $220s by September, according to blockchain.info, a wallet provider and consolidator of data from major exchanges.

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Then, last Friday, the price began soaring into regions not seen in nearly a year. By Tuesday, it was in the $400s, hitting a high of $437 by the end of the next day. The last time Bitcoin finished above $400 was Nov. 13, 2014, when it hit $406, according to blockchain.info’s data.

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The rally caps a wild ride for Bitcoin this year. 2015 began with a collapse that saw the price tumble to a low of $176 by mid-January. The swoon, which saw Bitcoin reach an extreme low point after at one time selling for more than $1,000, was blamed on a number of factors, including rampant short-selling, the hack of Bitcoin exchange Bitstamp, and even growing doubts in some quarters about the digital currency’s potential to appeal to a mass consumer base.

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That crash was followed by the mid-summer mini-rally, another swoon, and now the surge seen this week. The currency’s volatility creates a sense of uncertainty about whether current levels can be sustained, and, if so, for how long.

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Volatility has also been blamed, in part, for Bitcoin’s struggle to win adoption among the general public. The currency, which enables lightning-fast, final, and anonymous transactions, has appealed since its emergence six years ago to libertarian-leaning consumers and privacy geeks. It has also appealed, to some extent, to online criminals, leading to efforts in some states, such as New York, to introduce regulation.

Still, Bitcoin’s appeal has been growing this year, despite the wild swings in price. Blockchain.info reports 4.76 million Bitcoin wallets on its system, up 74% since the first of the year. Daily transactions in these wallets stands at nearly 72,000 as of Friday, about triple the number at the start of the year. This number, though, is nearly as volatile as Bitcoin’s price, rising and falling by tens of thousands of transactions within days. It reached a peak of 88,000, for example, only on Wednesday.