Bitcoin broke through $1,800 to a fresh record high on Thursday, and has gained more than $200 this week alone, driven by a huge jump in demand from around the world.
The digital currency started off the week at around $1,555 per coin, then breached $1,700 for the first time on Tuesday before carrying on to climb above $1,800, according to Coindesk data.
The price slipped today, from around $1,830 yesterday to $1772 currently. Still, the cryptocurrency is set to finish the week with a gain of around 13 percent.
This accumulation has added around $2 billion to bitcoin's market cap. It currently stands at $28.86 billion. At the start of the year, the market cap was around $16 billion.
Here's a chart showing the market cap growth since bitcoin began in January 2009.
There are several reasons for the recent price rise. Regulators in the U.S. and Russia are looking into bitcoin and the blockchain (the technology that underpins the currency), while the Securities and Exchange Commission is reviewing a decision regarding a bitcoin-based exchange traded fund.
More significantly, Japan decided in April to recognize bitcoin as a legitimate currency, which has led to a surge in demand for bitcoin, especially from institutional investors looking for assets offering growth.
As a result, there's a "tidal wave" of long term investment flooding into bitcoin, according to Pavel Matveev, co-CEO at blockchain personal finance platform Wirex. He says Japanese savers are frustrated as Abenomics, the Japanese Prime Minister Shinzo Abe's economic plan, has failed to deliver an end to two decades of deflation.
"Savers have nowhere to put their money," he told CNBC in an email on Tuesday.
"Bitcoin on the other hand has outperformed every traditional currency by a near astronomical margin," he added. "Now that Japan's biggest financial institutions are embracing bitcoin, we are in blue sky territory in terms of valuation."
Matveev has previously predicted bitcoin reaching $3,000 by the end of the year.
Fran Strajnar, co-founder and CEO of digital currency data provider Brave New Coin, echoes this theme.
"The world is full of cheap or free credit. There are asset bubbles everywhere from property to retail to bonds," he told CNBC via email on Friday.
"Lots of cheap credit is looking for new safe havens to move into and digital assets are an attractive new asset class. The volatility (of digital currencies) really doesn't matter as demand greatly outstrips supply."
Strajnar predicts there may be some price corrections in the short term for bitcoin, before it begins to skyrocket.
"We expect some corrections but have adjusted our outlook and are now feeling that the $1200 to $1800 per bitcoin price band is a temporary consolidation period before undoubtedly climbing up to $3,800 to $8,000 over the next six months."
For more reasons explaining why bitcoin prices are taking off, read this article.