Strong start for bitcoin and blockchain technology this week

The bitcoin rally continues into this week as prices Monday morning hit near $370, the highest of the year so far. Business Insider reports the cryptocurrency has gained 70% on private exchanges over the past two months since hitting a second-half low of around $213 at the end of August.

Indeed, the performance of bitcoin is outshining one of the most traditional of valued commodities: gold. According to MarketWatch, bitcoin has gained 5.8% year-to-date, while gold has slipped to its lowest price on Monday. The drop in gold prices stems from expected interest rate increases from the United States’ Federal Reserve, which has helped the dollar. Typically the dollar has an inverse relationship with gold.

The rally comes at the same time as another mile marker: CNNMoney reports a record $1 billion has been invested into bitcoin-related startups. However, investment is going into blockchain technology and not the cryptocurrency itself. Companies like banks are interested in utilizing the blockchain, as the same records are kept across several computers. In other words, the system can prevent fraud.

The billion-record mark comes after several high-profile firms announced their investments in the technology over the past couple weeks (CoinReport last week covered the investments into Digital Currency Group).

Despite the progress made, some speculate that rising bitcoin prices are the result of speculation. CoinTelegraph, for example, examined current price charts and stated that “indicators all remain overbought and extremely elevated.” Among the indicators is the daily chart showing the 50-day exponential moving average (EMA) being above the 100 and 200 days EMA and the relative strength index moving into an overbought position. The bullish activity is stemming from unusually high volume from China.

Even if bitcoin prices are due to come back down, the wave of recent private and government support for bitcoin and blockchain technology is a strong indicator they’ll survive the drop and whatever challenges come next. After all, the current rally is still miniscule in comparison to the 2013 bubble that sent bitcoin prices over $1100.

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