In the last week, the cryptocurrency Bitcoin (BTC) experienced an unprecedented period of record-breaking volatility and mainstream attention. On December 7, Bitcoin surpassed its previous all-time high price and skyrocketed from around $10,000 to almost $19,000 on the popular exchange Coinbase, with the buying frenzy resulting in its website freezing. Bitcoin's market capitalization reached $305 billion, overtaking that of the world's largest electronic payment processor Visa (V  ). But in the next few days, the price fell 9% to around $13,000 amidst unprecedented volatility and mainstream media interest. Investors are giving several explanations for the historic spike and crash, and they suggest that Bitcoin is entering a new era.

The full, nearly decade-long historical price chart looks like a blast to the moon, as dips from 2013 and 2015 have been overshadowed by a meteoric rise in just 2017. Indeed, many Bitcoin faithful believe that Bitcoin remains fundamentally undervalued and has the potential to reach six or more figures in a few years. So perhaps a possible reason for the December spike is that a number of new investors have discovered Bitcoin as a long-term investment. In other words, Bitcoin has begun to attract mainstream adoption from everyday investors across the world.

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But another explanation is that the recent rise has been fueled by pure short-term speculation. Financial experts and commentators have talked about Bitcoin being in its biggest bubble yet. They have increasingly compared Bitcoin's price growth to the 17th century Dutch tulip mania, when the price of multicolor tulip bulbs bubbled to over 10 times the salary of a skilled artisan before crashing. Believing that the recent rise is nothing more than another stage of hyped-up speculative trading, skeptics assert that Bitcoin is a fundamentally flawed security whose crash is inevitably near.

Some big name investors remain enthusiastic about Bitcoin's prospects. The Winklevoss twins of Facebook (FB  ) fame were early Bitcoin adopters, turning $11 million invested in 2014 into over $1 billion. They believe that Bitcoin is still at one-tenth to one-twentieth of its potential multitrillion-dollar market capitalization and that Bitcoin will grow exponentially as the number of users increases. Venture capitalist Jehan Chu is also optimistic. He stated that he expects the price to reach $50,000 by 2018's end due to greater global adoption. In particular, he noted that China and South Korea are markets where interest in Bitcoin will grow.

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A few risk factors will affect Bitcoin's fate. First is the concentrated ownership, in which a few "whales," about 1,000 early adopters, own 40% of all existing bitcoins. Though the "whales" could collude to move the market in the future, that seems unlikely as they are mostly ideological investors who will hold their bitcoins for years, if not decades. Second is the prospect of Wall Street and institutional money that could enter the Bitcoin market in the next year. On December 10, Bitcoin futures contracts began to be traded on the Chicago Board Options Exchange (CBOE  ), and will be soon also be offered on the CME and Nasdaq, pointing to higher prices. Finally, global acceptance will determine the cryptocurrency's long-term viability.

The author holds a long position in BTC.