A lot of people were surprised when Bitcoin's price surged to $10,000 last week —a more than tenfold increase since the start of the year. But this week Bitcoin's rally has actually accelerated. Bitcoin's price passed $12,000 yesterday. This morning, it surged past $15,000. As I write this, one bitcoin is worth about $15,200.

The astonishing increase means that all bitcoins in circulation are now worth around $250 billion. It's not clear why Bitcoin's price is rising so quickly.

Over the last year, the currency's popularity has been buoyed by a larger phenomenon of initial coin offerings—sales of cryptocurrencies that compete with bitcoins. For many people, the easiest way to acquire these alternative cryptocurrencies is to first buy some bitcoins from a bitcoin exchange, then trade those bitcoins for another currency.

But if anything, ICO fever seems to have been cooling since September, as some high-profile cryptocurrencies have run into problems . Yet during that same period, Bitcoin's value has tripled from $5,000 to $15,000.

At this point, Bitcoin seems to be caught up in the self-perpetuating hype cycle of a bubble. This has happened to Bitcoin twice before. In mid-2011, Bitcoin's price rose from $1 to $30 in two months, before crashing back to $2 before the end of the year. Then in early 2013, Bitcoin's price rose from $13 to more than $250 in four months—before losing 80 percent of its value over the course of 48 hours.

In each case, the crash was preceded by a spectacular, short-lived rally. It's impossible to say if this is the end of the current Bitcoin boom—or whether things will get even more insane before the price crashes. But it's a safe bet that we'll see a lot more volatility in the coming days. Watch out.

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