Bitcoin is enjoying one of its best rallies in years.
The digital currency, which has registered a series of records over the past several days, marked a fresh high Wednesday, when it surpassed $490 for the first time since September 2014, according to data from Coindesk, a bitcoin price index.
Read: Is bitcoin a better investment than gold?
Bitcoin, which was at $491.77, according to Coindesk early in New York, has soared more than 22% so far on Wednesday and has climbed 72% over the past three months, as the chart below illustrates:
Financial blog site Zerohedge speculates that the run-up in bitcoin's price is linked to Chinese investors using the currency as a way to get money out of the country amid controls Beijing has imposed to limit the outflows of money. Here's how Zerohedge explains it via this March 2014 Reuters article:
China's underground money is flowing across the border into the gambling hub of Macau, a former Portuguese colony that like Hong Kong is an autonomous region of China. And the conduit for the cash is the Chinese government-supported payment card network, China UnionPay.
In a warren of gritty streets around Macau's ritzy casino resorts, hundreds of neon-lit jewellery, watch and pawn shops are doing a brisk business giving mainland Chinese customers cash by allowing them to use UnionPay cards to make fake purchases - a way of evading China's strict currency-export controls.
On a recent day at the Choi Seng Jewellery and Watches company, a middle-aged woman strode to the counter past dusty shelves of watches. She handed the clerk her UnionPay card and received HK$300,000 ($50,000) in cash. She signed a credit card receipt describing the transaction as a "general sale", stuffed the cash into her handbag and strolled over to the Ponte 16 casino next door.
The withdrawal far exceeded the daily limit of 20,000 yuan, or $3,200, in cash that individual Chinese can legally move out of the mainland. "Don't worry," said a store clerk when asked about the legality of the transaction. "Everyone does this."
The practice violates China's anti-money-laundering regulations as well as restrictions on currency exports. Chinese authorities also fear the UnionPay conduit is being used by corrupt officials and business people to send money out of the country.
Whatever the reason for the rise, bitcoin's rise is fairly stunning considering the reason its value collapsed in the first place.
Bitcoin cratered in 2014 after Mt. Gox, then one of the world's largest bitcoin exchanges, announced that customer bitcoins, worth hundreds of millions of dollars, had been stolen by hackers. Bitcoin shed about 75% of its value that year.
But recently the digital currency being designated a commodity by the Commodity Futures Trading Commission in September and bitcoin drawing the attention of prominent investors like the Winklevoss twins has garnered it some fresh legitimacy.