Bitcoin being mined.

What bitcoin’s biggest hour ever tells us about its future

December was the gold rush, April is the creation of a market that can function smoothly at at any level

The price of bitcoin surged over $1,200 in just one hour Thursday morning as more bitcoin changed hands than at any time in its 9-year history. Over $1.2 billion in bitcoin traded over the course of half an hour, beginning at 7 a.m. While analysts can’t find a credible reason why, the real big story of the day is how smoothly the networks handled this huge surge.

In April 2017, when bitcoin traded at $1,100, a single transaction cost $0.84. That same transaction in December, when bitcoin edged up to $20,000, may have cost up to $54.90. On Thursday, with a billion-dollar hour on the books, those trades cost less than $0.84, making the trades more profitable than they were a year ago. Thus the good news for HODLer is that bitcoin’s lowest transaction fees of the year didn’t budge.

Big financial companies entered the market with massive trades, though the Winklevoss twins tried to make sure you couldn’t see them place their big orders. But unlike your average Coinbase user, those big financial firms in the market didn’t buy bitcoin because they just got some birthday money or an early paycheck. They were forced into it when their short trading bets didn’t work out. “Once [bitcoin] broke higher, shorts were squeezed and forced to cover,” Brian Kelly, a CNBC contributor and digital assets strategist, said Thursday.

This kind of market activity would not have been possible even four months ago. Bitcoin’s network has matured to a level that can handle whales. December was the gold rush, April is the creation of a market that can function smoothly at at any level.

On the supply side, the profitability of mining remains a factor. It’s like Uber surge pricing for transactions. Bitcoin spiked to $19,783.21 on December 17, 2017 and is now down to nearly a third of that. But a system can’t run on speculation forever. If whales want to enter the market, and count on cheap trades, they’re going to rely on the same mining system as everyone else. For that to work, cryptocurrency mining needs to have a future worth investing in. That requires brick and mortar resources, renewable electricity grids and advances in processing power, not just speculation.

Bitcoin will need an increase in the number of miners in the network to keep prices low. But while bitcoin prices can fluctuate overnight, the number of miners coming online changes very little. Mining pools that are profitable only become so by coming online as soon as they can, meaning their growth happens steadily, quite differently than the way prices have been moving, especially over the past year.

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Brendan Sullivan is a writer, producer, and author of the memoir Rivington Was Ours: Lady Gaga, the Lower East Side, and the Prime of Our Lives. Disclosure: he owns cryptocurrencies. Follow him on Twitter.