The price for bitcoin hit new highs Friday, reaching $142.76 at the leading yet beleaguered Mt. Gox exchange. The next largest exchanges in trading volume sold bitcoin for as high as $126.14 at Bitstamp and $121.95 at BTCe.
There is some speculation that the price has risen so quickly this week due to falling liquidity in the face of high demand, as bitcoin on offer are few and far between at these levels. On the Bitcoin reddit forum, the speculation that fewer bitcoin were offer at Mt. Gox could also be due in part to ongoing concerns about its liquidity in U.S. dollars in addition the the natural decline in offers during a rapid increase in price. The bid at other exchanges may also have a rising complement from arbitrageurs willing to simultaneously provide liquidity in bitcoin at Mt. Gox.
Another factor speculated upon is that as
However, one point which is clear is that an asset which can increase 9% in an hour could be just as volatile in both directions. So caveat emptor, or caveat speculator at least. It’s particularly a concern as the first spike this week to the $120 occurred on high volume throughout the morning, while the rise on Friday was the result of a high volume of 20,000 bitcoin traded in a single hour. (See chart below, courtesy of BitcoinCharts).