Correction: Article has been updated to reflect that one-year high is based on BPI closing prices; 36% gain was achieved in last two weeks, not last four days.

The price of bitcoin has hit its highest closing price in the last year, trading at $436 and climbing at press time, according to the CoinDesk Bitcoin Price Index.

Bitcoin has gained an astonishing $115 or 36% over the last two weeks. It was changing hands for $320 a coin on 25th November. The price briefly touched $500 on some exchanges on 4th November before dropping under $400 in the following days.

The strong rally is accompanied by record-breaking trading volumes on bitcoin exchanges. On 5th December 3.49 million bitcoins were traded across all exchanges tracked by data provider Bitcoinity. This smashed the previous record for daily traded volume established just days prior, on 26th November, of 2.86 million coins traded.

Trading volume has remained robust since its high watermark, with daily trading consistently closing above the 2 million BTC level.

Falling Yuan

Market-watchers offered theories ranging from the falling price of the yuan, to the media hoopla around a supposed unmasking of Satoshi Nakamoto by two prominent technology publications, to an abundance of positive newsflow around the blocksize debate.

Daniel Masters, who runs the Global Advisors Bitcoin Investment fund that is widely known as GABI, said a weaker yuan was driving Chinese investors into bitcoin. The yuan has fallen 4% against the US dollar this year. He told CoinDesk:

“It’s pretty simple in my view … A domestic Chinese investor is faced with falling yuan, falling commodity prices and falling real estate prices. One of the few alternatives is bitcoin, which is negatively correlated to all of this.”

Indeed, the exchanges with the most volume traded were the ones based in the mainland, with OKCoin and Huobi leading the way. Observers have previously noted that exchange volume figures, which are self reported, should be treated with caution because they can be manipulated.

Masters said China will continue to be a major factor driving the bitcoin price up in the long term as its economy continues to slow and the yuan sheds value.

The Wall Street Journal reported four days ago that the bitcoin rally was being driven by traders arbitraging the cryptocurrency and units of the Bitcoin Investment Trust (GBTC), which is publicly traded.

Unlikely Arbitrage

Although the Journal did not describe the arbitrage mechanism, its story claimed that narrowing spreads between the bitcoin price and the GBTC price allowed traders to profit as they would when arbitraging an exchange-traded fund (ETF) and its underlying assets.

“The increased activity on the OTCQX-traded fund may have triggered a wave of bitcoin buying, contributing to the price spike,” the Journal wrote.

Market watchers on r/BitcoinMarkets have discounted this theory, pointing out that shares in GBTC traded in the public markets must be held by unit-holders for at least a year, meaning they are disconnected from the current bitcoin price.

“There is no mentionable arbitrage mechanism, only GBTC shares you can buy/sell are the year-old+ [Bitcoin Investment Trust] ones,” one punter wrote on r/BitcoinMarkets.

Institutional trader Harry Yeh of Binary Financial said a slew of news coverage around bitcoin in the previous weeks has been a critical price driver.

Positive newsflow

Yeh pointed to the Scaling Bitcoin conference in Hong Kong, which produced the ‘segregated witness’ scaling solution that doesn’t require a hard fork as one example. Additionally, the Satoshi ‘unmasking’ by Wired and Gizmodo has cast a spotlight on the cryptocurrency, he said.

Yeh said bitcoin may simply be rebounding from a pronounced price dive in 2014, when it was “very oversold”. Conversely, he said the technical indicators, in his view, showed that bitcoin is now on a trajectory similar to its massive run-up in 2013, which led to it breaking the $1,000 mark.

Yeh said: