Bitcoin is a bubble! Bitcoin is the future! Bitcoin is a bubble, but also the future! With the world scrambling to determine whether to accept the bitcoin religion, the market issued a number of strong signals over the last week that its phenomenon, which seems like as good a characterization as any, isn’t going away without a fight.

On November 27th, Bitcoin traded above $1,000 on the Mt. Gox exchange, the first time it crossed that threshold on any US dollar exchange (BTC China briefly traded at 7,000 yuan, or approximately $1,120, on November 19). A day later, the average price of bitcoin across all major global exchanges crossed that same symbolic threshold. Then, another day later on November 29, in truly mind-boggling fashion, the value of bitcoin briefly topped the value of one ounce of gold.

As much as these are bullish indicators – meaning they suggest a market that’s betting on a continued rise in bitcoin’s value – they are also the kind of frothy milestones that, when occurring in other markets like stocks, currencies, and commodities, can lead to a rapid sell-off, as speculators take profits and wait to evaluate market sentiment.

Bitcoin did drop briefly following both milestones, but not nearly as deeply or as permanently as many bears were predicting. Minutes after crossing passing gold at $1,242, bitcoin’s value fell 13 percent, but it quickly found a floor and continued to trade above $1,000 for several days.

Then, with Asia waking up for the new work week, and the United States wrapping up a holiday weekend, bitcoin “crashed” late in the day yesterday and into this morning. The average price across all exchanges fell as low as $864 at 3 am EST this morning. Surely this was the “reckoning” that people had been predicting. Those in the media who had ringing the bubble bell were quick to publish headlines calling it a “crash.”

As quickly as the price fell, it rebounded, and was once again trading above $1,000 by 9 am EST this morning. It has since hovered around that $1,000 threshold throughout the afternoon and is currently trading at approximately $1,035 on average (as of 6 pm EST).

On top of these potentially panic-inducing milestones, and the subsequent brief but noteworthy selling spree, the crypto-currency also withstood the shutdown of the second bitcoin-centric online black market in as many months.

Following the FBI’s October 2 shutdown of Silk Road, an anonymous marketplace selling drugs, weapons, humans, and other illegal products and services, as well as the largest locus of bitcoin commerce anywhere, several copycats quickly sprung up to fill the void. Today, one of the largest of those copycats, Sheep Marketplace, shut down unexpectedly, after being robbed of 5,400 bitcoins, valued at approximately $6 million. A second, Black Market Reloaded, has halted new registrations in light of the news and amid a flurry of

A message on the Sheep homepage reads:

This vendor found a bug in (sic) system and stole 5400 BTC – your money, our provisions, all was stolen. We were trying to resolve this problem, but were not successful.

At this point, that’s all the available information. Given the uncertainty, and the fact that bitcoin theft is becoming an all too common issue, it’s noteworthy that the price of bitcoin has largely withstood this news. The market showed similar resilience in the wake of the Department of Homeland security’s seizure of Mt. Gox’s US accounts and the FBI’s shutdown of Silk Road.

Of course, the behavior of a still nascent and semi-illiquid market over a narrow window like a few weeks does not invalidate arguments in favor of this being a bubble. What it does indicate is that the market participants are not easily scared and that this market appears to have, at minimum, near term staying power.

There are a few structural issues that could contribute to bitcoin’s surprising stability. The first is that with each government seizure and large-scale theft, the market loses a measure of liquidity. Eventually the government may offload its bitcoin deposits, and thieves may successfully launder their digital bounty enough to offload it without attracting attention. Short term, however, these coins are removed from circulation, a not insignificant fact in a market that supports just 60,000 to 80,000 transactions per day, on average. This reduced liquidity is compounded by increasing global demand, led by rapid adoption in China.

Predicting the future value of bitcoin is a lot like reading tea leaves, in that there’s really no wrong answer. There remain a near-endless number of regulatory, macro-economic, and human psychology factors that could just as easily send the currency to $1,000,000 as they could to $0.10.

But if one thing is becoming clear, it’s that the bitcoin investors don’t scare easily.