Bitcoin soars $1,000 in week as Wall St. firms take notice

Ok it’s time to dig into the reason for bitcoin’s surging price moves. The digital currency is up just under $1,000 in the last week.

While it was easy to attribute the earlier rises to gamers and then nefarious dark web sites trading on drugs, weapons and sex, or Chinese investors looking to move money out of the country, these latest moves bringing the price to more than $2,750 have far more deep-pocketed investors.

And that’s who is coming into the market — investors — looking for these 5% up daily moves.

I took a look at 5 minutes of bitcoin trading around the globe on Thursday morning and more than 200 bitcoins were traded with the US taking down 150 of them. China in the middle of the night there bought 40.

That’s $55,830 in purchases of bitcoin in dollar terms in five minutes trading window at 7am EDT.

The most surprising country from this trading activity window was that of South Africa, which had such a big presence accounting for roughly 2.5% of the sales recorded over the time. Understanding that this is just a snap shot, it still backs up earlier observations at different times of the buyers distribution.

As I wrote earlier this week, many Wall Street firms are quietly offering well-heeled clients the ability to buy bitcoin and other digital currencies through their trading operations.

While these firms are not publicly endorsing cryptocurrencies, there’s money to be made there. You would need that type of liquidity in the market to see the price jumps of the recent weeks.

Has bitcoin taken on the role of gold and silver as a hedge against the dollar?

Many of the currency desks are the ones trading bitcoin now. So it would make prefect sense that the unencumbered bitcoin — which has no futures, options or ETFs with the ability to suppress pricing — may have replaced precious metals as the dollar hedge.

Now understanding that this trading has taken on a life of its own. And the knowledge and acceptance of bitcoin is in its infancy, but these price movements have some big institutional players behind it. If you can take wild price changes over the course of 10 minutes as sometimes a free market will do, then the rewards can be quite handsome.

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