The price of bitcoin surged Friday to a record near $8,000, erasing the sharp pullback last weekend in a stretch that is volatile even by the digital currency’s standards. After slumping more than 25% over four days, bitcoin roared back this week, jumping to its highest level of $7,998 on Friday morning in Asia before retreating slightly, according to research site CoinDesk. The digital currency has risen more than 700% this year ahead of a highly anticipated launch of bitcoin futures, which could draw more institutional investors.
The price of bitcoin fell over the weekend after calling off the SegWit2X software update, which would have caused a fork in the blockchain. While multiple reasons have been cited for the price volatility, one of the more viable is that some investors were switching to alternative coins. Bitcoin cash, an offshoot of bitcoin that includes many of the technical upgrades being debated by developers, had more than doubled in the same period. Following the Segwit2x cancellation, Bitcoin Classic shut down, and Bitcoin Gold was launched. Moreover, Bitcoin Cash temporarily took center stage, surging to an all-time high of over $2,400 USD, as investors shifted money away from Bitcoin, on November 12.
This year’s surge comes as the digital currency starts to gain mainstream acceptance as a financial instrument after CME Group Inc., the world’s biggest exchange, said it would start bitcoin futures next month.
The main difference between bitcoin and bitcoin cash is the block size — the fundamental units that make up the blockchain at the heart of the cryptocurrency. Bitcoin cash offers a larger block that holds more data, meaning faster and cheaper transactions according to supporters of the new rival. Those supporters view the size increase as the update bitcoin needed to become a better means of exchange to compete with payment services such as Visa or Master Card. Bitcoin handles about seven transactions a second, compared with around 2,000 for Visa. Volatility is the name of the game.