Chinese demand is a factor.
The price of the cryptocurrency Bitcoin has surged over the past month in part thanks to Chinese demand for what appears to be a Russian pyramid scheme. The Chinese have been posting testimonials about a “social financial network” called MMM, according to the Financial Times. Under the scheme, participants are required to buy bitcoins to join, then are promised a 30% return along with additional money for referrals.
The program was devised by Sergey Mavrodi, a former member of Russian parliament who was charged with fraud in Russia for allegedly running a pyramid scheme, the report says.
Bitcoin had been steadily gaining value over the last month, then saw its growth explode this week, spiking to a peak above $490 on Wednesday. By Thursday morning, the currency was back down below $400.
After a flurry of interest in 2013, bitcoin’s price collapsed following the failure of the MT Gox exchange in February 2014. The currency has yet to re-attain the highs reached in that period.