Its value surged on Wednesday, passing the $13,000 mark, before it shed about $1,000 within minutes. Around 6 pm ET, the currency was back to a $12,400-plus valuation.
The reason for the sudden midday sell off wasn’t immediately clear. But cryptocurrencies are known for price swings. A previous bitcoin craze hit a fever pitch in 2017. Bitcoin soared from just a few hundred dollars apiece in January 2017 to more than $20,000. But it came crashing down again. BItcoin’s value was still hovering around the $3,000 mark four months ago.
Experts say a weakening US dollar and fresh discussions about regulating digital currencies are fueling the latest spike in demand.
BItcoin reached a $10,000 value on Friday for the first time in more than a year. It was likely helped by an announcement from Facebook last month that the social network planned to debut its own digital currency, called Libra, introducing its 2 billion users to crypto.
Libra may hurt bitcoin’s value if it becomes the preferred choice for digital currency users. But the company’s foray into the cryptocurrency industry also renewed discussions among top economic leaders about regulating the industry, which could help legitimize alternative currencies in the eyes of consumers.
Jerome Powell, chair of the US Federal Reserve, and Bank of England Governor Mark Carney both indicated they were open minded and planned to work closely with Facebook on its Libra roll out.
Nigel Green, CEO of financial consultancy firm deVere Group, also urged world leaders at the G20 summit in Japan this week to take “decisive steps” toward creating a global regulatory framework.
“It’s now high-time the leaders at the G20 summit caught up” on regulating digital currencies, Green said, according to a copy of his remarks emailed to CNN Business. “Or do they seriously think that traditional, fiat currencies are the way forward?”
Bitcoin, and other cryptos from Ethereum to Dogecoin, are not formally backed by financial institutions or governments. Every purchase and sale of a bitcoin is instead recorded on a decentralized digital ledger, using a technology called blockchain. Because transactions can be recorded anonymously, crytpocurrencies have long been associated with shady online practices, such as buying and selling illegal goods on the dark web.
But supporters from Wall Street to Silicon Valley have argued that cryptos are the future of money. They say it’s more resistant to fraud and theft. Many advocates hope regulation and more involvement from traditional banks could help win over skeptics and make cryptocurrencies a part of everyday life.