Why did Bitcoin break its AU$12,000 all time high?
Each new high reveals more about bitcoin.
Bitcoin has reached a new all time high, hitting AU$12,359 (US$9412) at the time of writing.
There might be a lot of factors behind the recent rise, one of which might be increased interest from deep-pocketed investment companies, and another of which might be its recent slumps. Bitcoin's seeming invulnerability, as noted with previous all-time-highs following slumps, might be largely based on the supposition that it's undervalued in the long run and will keep going up.
It's clear that there's a lot of appetite for it, and so far there are plenty of willing buyers who see profits every time the price drops.
In addition to the value of bitcoin itself, longer-term investors might also be enjoying bitcoin's many forks and the windfalls associated with each.
For example, users who held bitcoin on 1 August would have benefited from the Bitcoin Cash fork, and been freely given the same amount of Bitcoin Cash (BCH) as they held in bitcoin. Today Bitcoin Cash is worth around AU$2,230.
The 25 October Bitcoin Gold fork might also have left bitcoin holders happy and freely credited with a mirror image of their bitcoin holdings. Today Bitcoin Gold (BCG) is worth around AU$450.
And on 24 November the Bitcoin Diamond fork came along and gave users another load of new altcoins, equivalent to ten times their current bitcoin holding. The new coin has yet to gain support from most wallets and exchanges, but its speculative futures are trading at around AU$86.
Simply by owning bitcoin, users are making major profits from all the freebies that come their way.
Built by forks
Long-time bitcoin holders can make a lot of money from the new altcoins following forks. In addition, they might also drive up bitcoin prices.
Prior to forks, you'll typically see bitcoin prices rise as buyers jump in to get free altcoins from the fork. And even unsuccessful forks, like the controversial cancelled Segwit2x (B2X) fork, might also see bitcoin prices rise in the longer run.
The cancellation of the B2X fork, intended to bring some BCH-type features to bitcoin, was followed by rising BCH prices and dropping bitcoin prices as pro-fork users traded their bitcoin for bitcoin cash.
This was one of the biggest price-tumbles of the year, seeing bitcoin fall from AU$9,735 on 8 November to AU$7,705 on 12 November.
But for many, a price drop is an opportunity. There's clearly more than enough appetite for bitcoin that every significant price drop brings in the buyers. Prices then rebound quickly and often end up even higher than before.
So far these mechanics have made bitcoin resilient, and for many exceptionally profitable.
But it may also highlight the coin's potential weakness. Appetite for bitcoin seems to be bottomless, but that appetite might be the only thing propping up the coin's value. Bitcoin is still just one of many viable cryptocurrencies, and arguably it's far from the most practical or technically advanced.
As bitcoin moves beyond its seemingly endless forking, and as cryptocurrencies move further into the mainstream and users start diversifying their crypto investments, bitcoin might not continue to bounce back with as much gusto.
On the one hand, even its most ardent supporters have to admit that every new high has bitcoin looking more like a bubble. On the other hand, people have been saying that for years now.