Today bitcoin hit a new all-time high of $7,300.

This latest move up gives bitcoin a one-year return of 875%. At this time last year, the coin was trading under $700.

During times like these, I’m often asked, “What’s causing this spike?”

My answer is consistent: This is simply bitcoin adoption growing fast. The number of people using it as a speculative “store of value” continues to rise exponentially.

Major U.S. bitcoin exchange Coinbase is adding a mind-blowing 50,000 new users per day. And that’s just a single exchange out of dozens of large ones all over the world.

Sure, there’s been some good news recently too. This week the CME Group, a huge player in the derivatives market, announced that it was launching bitcoin futures by the end of this year.

But for those of us who have been around a while, these types of gains are not unusual. After all, the cryptocurrency has risen from $5 in early 2013 to more than $7,000 as I write this. This is what bitcoin does.

As I’ve explained here previously, bitcoin has a unique viral growth mechanism. By “viral,” I simply mean that it spreads naturally from person to person.

Here’s how I described this effect when bitcoin was trading at $2,600 during the summer.

Because as more people make money off bitcoin, more of their friends hear about it. More people get interested and eventually become comfortable enough to invest.

This is bitcoin’s secret to viral organic adoption. And unless a black swan event happens, it will continue doing its thing.

It’s a virtuous cycle for holders, and it’s accelerating.

Bitcoin Is NOT Valued Like a Stock

I continue to believe what we’re seeing here is the beginning of bitcoin and cryptocurrency going mainstream. So when I hear that bitcoin is a “bubble,” I chuckle.

Here’s the thing that most people haven’t wrapped their heads around yet…

Bitcoin does not become “overvalued” like a stock when it rises in price, because there is no earnings ratio in crypto.

It’s not a bubble.

Bitcoin is simply a new way to store and send value. There is a limited supply of 21 million coins.

So its price is driven by how many people believe in the idea.

And the number of people who now believe bitcoin has real value is skyrocketing. Many of them are still watching and learning (it usually takes a while), but will eventually pull the trigger after they’ve watched it double a few times.

And now that bitcoin is a $100 billion-plus asset, everyone is taking notice. It usually takes at least a few months after first learning about bitcoin until one is comfortable enough to buy it. So most of the buying from this “hype cycle” is probably yet to come. And then it will repeat.

As I wrote in that piece from three months ago, “If bitcoin goes mainstream, the price will go orders of magnitude higher.”

This is a critical detail that most people overlook. Because the price has risen so much, they tend to think they’ve already missed out.

But bitcoin is a new type of creature. A viral monetary system spreading rapidly, threatening the incumbent fiat currencies.

In short, its price is not constrained by earnings the way that stock prices are.

I’m going to close with one more line from that piece I wrote in midsummer. It’s as true now as it was then.

So if you think you’ve missed out on bitcoin, look a little further into the future.

It won’t be a straight shot up. It never is. But it’s going to be a wild and fun ride.