- Bitcoin surged more than 5 percent at one point Thursday, reaching a price as high as $1,839.23
- Analyst Brian Kelly attributes the bitcoin rally to Japan's legalization of the digital currency in April.
- Bitcoin is up more than 30 percent in May.
The price of hit a record high Thursday, crossing above $1800 just two days after rising above $1700 for the first time.
Bitcoin jumped more than 5 percent at one point, reaching a price as high as $1,839.23, according to CoinDesk. The digital currency is now up roughly 36 percent so far this month.
BKCM CEO Brian Kelly says he believes the rally is driven by Japan legalizing bitcoin and institutional investors entering the digital currency universe.
On April 1, Japan passed a law recognizing bitcoin as a legal method of payment and put in place capital requirements, cybersecurity regulations, employee training, and annual audits. Furthermore, the Accounting Standards Board of Japan has also started developing standards for digital currencies such as bitcoin, according to a note from Kelly.
"There's a tremendous amount of bitcoin influx in Japan," he said. "It's one of the most popular currencies in Japan."
The hedge fund manager, who runs a digital assets portfolio, says there's been a massive adoption of Bitcoin in Japan and even speculation that some major Japanese banks will start trading bitcoin as a currency like the , dollar and euro.
"These developments have made Japan the dominate player in the bitcoin trading market. According to data compiled by CryptoCompare, the Japanese Yen is the most popular fiat currency used to buy bitcoin," Kelly said in a note. "Over 50% of the daily fiat to
bitcoin trading volume is in Japanese Yen."
Minneapolis Federal Reserve Bank President Neel Kashkari spoke positively about the potential for blockchain technology this week, saying, "I would say I think conventional wisdom now is that blockchain and the underlying technology is probably more interesting and has more potential than maybe bitcoin does by itself."
But Kelly disagrees, calling bitcoin the "gateway digital currency" for other cryptocurrencies in the blockchain-technology supported space.
The rally this month has also been helped by the SEC saying it would reconsider a bitcoin ETF in the U.S.
— CNBC's Arjun Kharpal contributed to this report