The price of bitcoin is back below $700 after making huge gains on Sunday and Monday

Francesca Washtell
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The bitcoin price surged on Sunday and Monday (Source: Getty)

Bitcoin stayed resolutely below $700 (£493) during most of today's trading, after edging to highs of $719 on Monday.

By 5pm (GMT), the price of a single bitcoin was worth $673, according to market exchange trader Bitcoinity. After opening at $705.62 on CoinDesk, the price of bitcoin had fallen over four per cent to $674.79 by the evening, taking back many of the gains made on Monday.

On Sunday, bitcoin surged past the $600 barrier to above $650 in in a single day.

The cryptocurrency's rally over the past week has been driven by ballooning demand in China, following increasing fears that the yuan could depreciate and warnings from the International Monetary Fund on the country's corporate debt levels.

Read more: New research argues bitcoin is undervalued by $200

Although Chinese demand has caused much of the price spike, an upcoming change in the way bitcoins are mind is also affecting its value.

The so-called halvening – a reduction in the amount of bitcoins produced by mining – means that short term supply could be squeezed, pushing up the price.

Expected in mid-July, this will halve the number of bitcoins mined at a time from 25 to 12.5.

Read more: Treasury planning crackdown on bitcoin anonymity

In other news, a survey from Smith & Williamson found more than six in 10 (61 per cent) of respondents to its Enterprise Index said they did not see bitcoin as having had a major impact on the major currencies and models of payment over the past five years.

Business leaders also said they did not believe bitcoin, which is nonetheless forecast to be the world's sixth largest currency reserve by 2030, will become a "widely accepted method of payment".

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