broke through the $1,900 mark for the first time on Friday, hitting an all-time high, driven by global political uncertainty and key developments within the cryptocurrency world.
The digital currency was trading at around $1,951.87 on Friday morning, according to CoinDesk's bitcoin price index. The current level marks a more than 6.8 percent rise from a week ago.
Bitcoin's market capitalization is now $31.89 billion, up more than $4 billion from Monday.
A number of factors are responsible for bitcoin's rise, from increased trading in Japan to debates over the future of bitcoin's underlying technology.
Trading volumes in Japanese yen and Korean won have risen and combined account for around 48.6 percent of trading, according to data website CryptoCompare. That's thanks to recently passed legislation that allowed retailers in Japan to begin accepting bitcoin as a legal currency.
Since then, Japan has been a big driver of bitcoin trade.
Japanese yen bitcoin markets are also trading higher than U.S. dollar markets, with the yen-bitcoin cross trading at 228,783.29 yen or $2,058. This is higher than CoinDesk's bitcoin price index. Given that the Japanese yen has the highest share of bitcoin trading at the moment, this is helping push prices higher.
"Arbitrage between the fiat pairs drags markets up or down in line with leading markets. At present, volumes on the KRW and JPY pairs dominate trading with a combined 48 percent market share," Charles Hayter, CEO of CryptoCompare, told CNBC by email on Friday.
In the past, bitcoin has acted as a safe haven for investors worried about political instability and the performance of other asset classes.
U.S. equities saw a sell-off this week before rebounding, while the political establishments in America and Brazil are facing potential scandals.
Investors are concerned that President Donald Trump might not be able to deliver on his promise of tax reform, deregulation and infrastructure spending. At the same time, a report on Tuesday said that Trump allegedly asked ousted FBI Director James Comey to "let go" of the investigation into former national security advisor Michael Flynn.
Elsewhere, Brazilian President Michel Temer allegedly authorized bribes to silence a witness in a corruption scandal.
Political turmoil in the world could be supporting bitcoin, analysts said.
Behind the scenes, there is a debate in the cryptocurrency world about the underlying technology behind bitcoin known as the blockchain. At the moment, bitcoin transactions are taking an unusually long time to process and come with high transaction fees.
Many in the community wanted to initiate what is known as a "hard fork". This would have led to the creation of two separate digital currencies. For the full explanation of the debate, click here.
But an experiment with another cryptocurrency called Litecoin showed that a "hard fork" might not be needed and this has buoyed investors. The idea shown with Litecoin — the full explanation of which can be found here — showed the bitcoin community that there is a chance to speed up transactions and the backlog that has ensued.
"The new developments on Litecoin, which is experimenting with alternative scaling solutions may offer a brighter future for bitcoin, and a longer-term price increase, if those similar solutions can be applied to its network," Aurelien Menant, founder and CEO of Gatecoin, a regulated bitcoin and ethereum token exchange based in Hong Kong, told CNBC by email.
In the annual "Outrageous Predictions" produced by Steen Jakobsen, chief economist at Saxo Bank, in December, it was noted that bitcoin could hit $2,000 in 2017. This now looks very likely and others have put a higher price target on it.
Gatecoin's Menant previously told CNBC that bitcoin prices should climb beyond $3,000 this year.