The price of bitcoin could hit $3,000 by the end of the year after recently trading above gold and hitting a fresh record high, an analyst told CNBC on Tuesday.
A rise on this scale would represent a near 150 percent increase from bitcoin's current price of $1,204 at the time of publication, and a more than 130 percent increase from the fresh $1293.47 high it set last week, according to CoinDesk data.
The price of bitcoin at time of publication is not trading above an ounce of gold, but the recent rise in price, which is up 195 percent in the past 12 months, has been attributed to a number of geopolitical and broader market factors.
These include:
Increased regulation from Chinese authorities to clamp down on money laundering
Demonetization in India which has caused bitcoin to be seen as an alternative store of value
Volatility in other currencies and uncertainty in the global economy
Now Adam Davies, a consultant at Altus Consulting, who works with large financial institutions on technology, is predicting bitcoin can go even higher.
"In terms of price this year, I think it will go up to $3,000. As it becomes more pervasive and more generally accepted, I think you'll see rapid growth in adoption," Davies told CNBC in an interview on Tuesday.
"People are unsure about what is going on in the world, and digital currencies unlike the U.K. pound sterling have been hit badly because of Brexit, so people are looking to divest into bitcoin. There is a definitely upward trend. So the drivers will be hedging against currency fluctuations and insecurity in the markets."
bitcoin is on a good run but don't compare it to gold just yet
Peter Smith, CEO of Blockchain, a bitcoin wallet, told CNBC by email that his company is seeing "unprecedented volume and sign ups", adding that at the current price appreciation, a £3,000 dollar price by the end of the year is "feasible".
Experts said a number of other factors could help boost bitcoin this year. These include:
The expected approval of a bitcoin-based exchange traded fund created by Tyler and Cameron Winklevoss. This could lead to a "flood of institutional funds" entering the market, according to Thomas Glucksmann, head of marketing at cryptocurrency trading platform Gatecoin.
Japan has recently passed a bill that deems digital currencies as similar to fiat money and can be used as methods of payments, which could further the credibility to the cryptocurrency, which was once seen as just a means to buy illegal drugs
Glucksmann said that $3,000 by the end of the year seems "realistic" but somewhere in the region of $2,000 to $2,500 is a safer prediction.
"The bitcoin price will continue to rise this year although it's difficult to say by exactly how much.