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Jacob Maslow is a leading financial writer and accomplished author with bylines at business.com, huffingtonpost.com, patch.com, streetwisejournal.com and dozens of other leading publications. The native New Yorker brings his passion for the financial world to the forefront of every article with ... more

Bitcoin Hits $2,250 on Tuesday After Overnight Loss

Date: Wednesday, May 24, 2017 6:22 AM EST

Bitcoin prices are soaring, trading at over $2,250 on Tuesday after losing $200 overnight before a quick recovery. The rapid swing in the digital currency displays the currency's continued volatility in the market.

Bitcoin skyrocketed over 11% on Monday to reach $2,289, with the currency up 30% in the past week. Asian investor demand is attributed to the digital currency's rapid growth over the weekend, sending the digital currency to over $2,000.

The currency continues to break its own records, reaching an all-time high of over $2,000 and continuing to increase well into Tuesday's trading. Trading volume increases in the currency are also up thanks to "Bitcoin Pizza Day." The special day marks the first time that a person used Bitcoin to purchase a good. The goods, two pizzas, were purchased in 2010 for 10,000 bitcoin. The value today would be over $20 million.

Prices of the digital currency are up over 125% since the start of the year. Gold and bitcoin both perform well in times of political uncertainty. U.S. President Donald Trump's firing of FBI director James Comey and reports of a memo of Trump asking to halt the investigation into NSA Advisor Michael Flynn's ties to Russia have raised questions and concerns.

The reports sent bitcoin prices higher.

Bitcoin has been under pressure in 2017, as the Internal Revenue Service began investigations into the currency and tax evasion. The investigation sparked backlash from Republicans in Congress, which sent a letter to the IRS stating that the agency was overstepping their authority.

The IRS demanded that Coinbase provide details and information for every account their company has records on. The San Francisco-based company is a trading platform where traders can buy digital currencies.

The summons, if allowed, would result in 500,000 active customers and millions of records to be turned over to the IRS. Experts suggest that if the IRS probe is allowed to continue, it will have a negative impact on the currency.

The company's U.S. base allows it to remain under the jurisdiction of the IRS, unlike the Lionexo platform for traders.

Reports indicate that just 802 of the some 500,000 users of Coinbase have filed tax returns related to bitcoin in 2015. The IRS wants users to pay capital gains tax. Steep regulations against bitcoin and digital currencies may slow short-term growth.

Coinbase users state that many users haven't sold their bitcoins. The letter from the Republican leaders ask the agency for a plan, by June 7, that outlines how to enforce tax on the digital currency.

Bitcoin's value has nearly doubled in the last month.

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