A depreciating Chinese currency has been the primary driver for higher bitcoin demand as investors sought protection from the falling yuan which has dropped about seven percent through the year.
The majority of bitcoin currency trading takes place in China which has strict capital controls. Chinese people use the virtual currency as a way to circumvent those restrictions.
Analysts say the price of bitcoin will continue to rise as more devaluations are expected from the Chinese government.
The cryptocurrency bitcoin surged five percent on Friday, following a two-day rally. It was trading at $905 against the US dollar as of 1:25 pm GMT and is on track for its best annual performance since 2013.
It’s the first time this year the digital currency has been above $900 for a single coin, more than doubling in value since January.
Some experts say there has been no news trigger over the last few days to drive a new spike of the bitcoin price, others attribute it to the plunging Chinese currency and to concerns that the world’s largest economies are growing increasingly unstable.
“Nothing is moving at the moment like the digital currency which is blowing right through the roof,” Mati Greenspan, a senior market analyst at trading platform eToro told Business Insider.
“You’re talking about the eurozone fracturing, you’re talking about the Chinese yuan devaluation, you’re talking about Trump’s curveballs,” said Charles Hayter, founder and CEO of CryptoCompare as cited by MarketWatch. He added that demonetization in India could also be among the reasons for bitcoin’s rise.
Greenspan, however, warned investors that bitcoin is an incredibly high-risk asset. “We could easily see further jumps of $300 or more in either direction before the excitement fades,” he said.
Bitcoin was trading at around $435 at the start of the year, but its value was steadily climbing even though there are regular hacker attacks. Over $72 million worth of the cryptocurrency was stolen from the Hong Kong-based Bitfinex exchange in a cyberattack on the company’s systems in August.