Team Bitcoin has been hesitant in posting bullish rah rah articles in recent weeks as bitcoin has surged in price breaking all time highs on an almost daily basis. While we are of course long-term bulls for bitcoin it has been challenging to sort through the unbridled enthusiasm into what has been really going on.
Numerous sources have reported already that the bitcoin exchange in China has exceeded the volume of previous leader Mt. Gox. Some speculate with the help of 'Baidu' (google of China) announcing they would begin accepting the currency for some of its services. Beyond that there have been mainstream news coverage of Bitcoin on major media channels in China. China has 300+ million people in the middle class and one of the highest personal savings rates in the world.(some say 50%) They are extremely tech savvy and appear to be flocking to bitcoin in droves.
Meanwhile back here in the states bulls and bears alike have been trying to model this explosive growth against the traditional commodity,currency, and stock assets to no avail. No sooner do the bears scream bubble at 300 does bitcoin go and destroy that barrier. Convinced its a fluke, everyone says 400 is it, that is the ceiling get out by 400, even bulls are convinced of this bubble and start selling. 400 is quickly trounced in a day and bitcoin is raging towards 500, and nobody has any answers or insight that makes any sense.
Bitcoin has been in the news a lot in the states so that is definitely a factor. Today it is number #1 in Google trends hot searches. Number #1 really???
Today many US based bitcoiners were anxious as the first of 2 senate hearings with the senate banking committee took place. The internet was buzzing afterwards as the testimony from secret service, and Treasury Department's Financial Crimes Enforcement Network (Fincen) gave mostly positive feedback stating they had the tools already to deal with any illegal activity taking advantage of virtual currency anonymity. They also stated without question that virtual currencies are LEGAL, and can operate within the legal framework in existence. Ahead of this meeting even the Omnipotent Banker Ben Bernanke stated in a letter to congress that bitcoin...
"may hold long-term promise, particularly if the innovations promote a faster, more secure, and more efficient payment system".
Wow, while not an endorsement, it was certainly a positive remark from the master of the universe himself. Bitcoin proceeded to take off after the hearing blasting through the $700 mark.
So whats the diagnosis doctor?
Well we are not technical trading experts either but here is what makes sense to us:
Bitcoin is going viral
Its not sophisticated, its not technical, there are no proofs or facts we can provide to back that up. We are of the opinion that just like those stupid cat videos with 150 million youtube videos, bitcoin is going viral. The news headlines and tv coverage is expanding rapidly. The forums and social networks are buzzing with people wanting to get involved and China is showing no signs of slowing down. Today's senate hearing was music to the ears of many skeptical investors, and will hopefully spur a new round of bitcoin starts ups, provided banks open their doors to bitcoin businesses.