As I type this, Bitcoin is busting through the $1650 mark to the upside on the Coinbase exchange.

Making yet another all time high. If you haven't been paying attention, this has been going on for weeks now.

However, it's not just Bitcoin...

Ethereum is trading for over $90 right now. Also making all time highs seemingly every single day.

But it's also not just Ethereum...

It is tough to throw a rock right now without hitting some coin in the cryptocurrency markets that is either at an all time high or up significantly off the levels it was trading at just a couple weeks ago.

What the heck is going on?

What is fueling this incredible surge in prices in the cryptocurrency markets?

There are a couple things causing the surge in my opinion. One of the major factors being plain old supply and demand. Specifically in regards to Bitcoin.

Supply:

Bitfinex problems.

Some investors are having trouble withdrawing their funds after Taiwanese banks started blocking requests to transact in Bitcoins. Similar banks in the region are also following suit on any assets they have deemed as "too risky". This is causing problems processing transactions for the Bitfinex exchange.

So, basically some people that are using the Bitfinex exchange are unable to sell their Bitcoins.

As we have some holders of Bitcoin unable to sell, any new buying pressure pushes the price up. As the price continues to rise, more and more speculators jump in and the price continues to rise. Causing a momentum effect.

Therefore, because of exchange issues, the supply is being artificially constrained at the moment in some places.

Demand:

The demand seems have seen a sharp increase over the last couple weeks and it seems to be coming specifically from Japan, where recent rule changes are making trading virtual currencies cheaper and easier than ever before.

Starting in July, the consumption tax will no longer be applied to virtual currencies in Japan. This is big news and sparking demand for the virtual products.

Virtual currencies will now be cheaper and more accessible to the masses than ever before.

In response to the rule change, more than 10 companies are already launching exchanges for Bitcoin and other cryptocurrencies to be traded on.

How much demand is actually coming from Japan?

Check out the chart below and see for yourself:

As you can see, Bitcoin trading in Japanese Yen is more than half of all the trading volume over the last 24 hours.

The next closest currency is the USD, which is almost half the volume of what the JPY is doing.

Clearly, trading Bitcoins in JPY is leading the way.

Why are just about all the other Altcoins also going up?

I think one reason for that is that people are searching for the next hot thing.

If Bitcoin can go from $30 to over $1600, what is going to be the next one that does the same thing?

No one knows for sure, but if speculators buy enough of them, they will likely get one of them right.

The other reason (and probably the more important reason) is possibly related to why Bitcoin is running as well.

There are large groups of people that are being exposed to cryptocurrencies for the first time due to government rule changes as well as technology changes. These changes are helping fuel massive demand for the virtual currencies.

Another possible catalyst for Bitcoin and the entire crypto space in general has to do with the SEC reviewing their initial rejection of the Winklevoss ETF. You can read more about that here:

/@jrcornel/breaking-sec-reviewing-bitcoin-etf-rejection

The only question that remains is how long this extreme bull market will last?

Some of the reasons for the run are likely only temporary, like the restriction of supply where people are unable to sell for example.

However, large groups of people getting access to the currencies for the first time might be something that is able to cause a longer term bullish trend. Something that might be more sustainable in the long run.

Many new people and dollars will be introduced to virtual currencies for the first time over the coming years.

Therefore, this may indeed be the start of something, a paradigm shift, as opposed to just a few week buying flurry...

What say you?

Is this the beginning of a paradigm shift of just a flash in the pan Tulip Mania craze?

Sources:

http://www.businessinsider.com/bitcoin-price-blows-through-1500-for-the-first-time-2017-5

http://www.zerohedge.com/news/2017-05-01/bitcoin-ether-hit-new-all-time-highs-amid-buying-frenzy-liquidity-squeeze

http://www.zerohedge.com/news/2017-05-04/bitcoin-soars-above-1600-relentless-japanese-buying-frenzy

Image Sources:

http://www.reuters.com/article/us-bitcoin-etf-idUSKBN17R27J?il=0