The free market giveth, and the free market taketh away. It tooketh from bitcoin last week, with a lack of oversight allowing an exchange as corrupt and incompetent as the Japan-based Mt. Gox to flourish and then fail, taking bitcoin down 20 percent in the process. But the free market gave back two days later, as bitcoin regained all the losses and then some, as capital from throughout the world flooded into the digital safe haven.

With bitcoin, it’s impossible to tell exactly who is buying back in and causing the most recent price surge. The prevailing theory is that the Russian-Ukrainian conflict, which threatened to destabilize the Russian currency and foreign investments in the region, caused panicked investors to throw their cash into bitcoin as a means of wealth storage.

Of course, this is presupposition. Bitcoin’s anonymous nature makes it impossible to know who exactly is putting money in and out. But as the spike in April 2013, as well as one from March 24 show, there seems to be a correlation between major international events and the price movement of bitcoin. While actions in the US, like the Fed giving tacit approval to bitcoin, certainly buoy its price, the real influx and outflow seems to be driven by forces outside America.  

Correlation does not imply causation. But correlation can possibly mean causation, and the data on bitcoin’s price movement highly suggests that markets outside the US have an incredible amount of sway on the virtual currency's price, and that effect is felt immediately.

While the bitcoin market is almost impossible to predict, historically, price spikes seem to coincide almost directly with investor panic – much like the price of gold.

Here’ how the major movements in bitcoin's price over the past 365 days, courtesy of Coindesk:

As the Russian crisis had largely been mitigated, it will be interesting to see how the price continues to move. Although there are 12 million bitcoin in existence, a large portion are being held in static wallets by early adopters, whereabouts unknown. But the price movement isn’t being determined by those staying pat and holding. It’s being determined by international events.

So what to make of the March 3 spike? When the floodgates open, and strife worries investors, the global community looks to bitcoin to store their wealth.  But those investors can just as easily pull out en masse and cause significant bloodletting.

If things continue to stabilize in Russia, and investors put their faith back in the ruble, the effect will probably be similar to what happens to gold in times of renewed faith in “fiat”: this surge will be corrected by the free market.