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Bitcoin flirted with a new all-time high on Monday when it hit $67,791.37 as of this writing, less than $2,000 off its historic peak. The cryptocurrency is in the midst of a rally, climbing 18 percent in just one week.

It’s been over two years since the most popular cryptocurrency by market share notched its record high of $68,999.99 in November 2021.

The new year has been bright for Bitcoin, which climbed over 52 percent since Jan. 1 when it closed at $44,167.33.

Experts point to one recent event — the approval of Bitcoin ETFs — and one upcoming event — known as the halving — as catalysts for Bitcoin’s recent run.

Bitcoin ETFs are driving up demand

In January, the U.S. Securities and Exchange Commission approved the application of 11 spot Bitcoin ETFs, giving investors a more accessible way to invest in the cryptocurrency.

Big names like BlackRock and Fidelity have seen billions of dollars flow in from both retail and institutional investors seeking a more streamlined way to buy and sell the cryptocurrency. Now, investors can do so within their investment portfolios, alongside stocks and bonds.

“The approval of the spot bitcoin ETFs opened the doors to investment for financial advisors, retirement accounts and other brokerage accounts,” says Adam Blumberg, co-founder of Interaxis, a firm that provides cryptocurrency and blockchain education for financial advisors. “Investors no longer need to set up an account at an exchange like Coinbase or Kraken.”

Approval by the SEC also opened up more potential demand from 401(k) sponsors, companies looking to allocate on their balance sheets and other institutions that Blumberg says may have been waiting for an official green light from U.S. regulators.

At the same time, the ‘halving’ will shrink the supply of Bitcoin

Another potential cause for Bitcoin’s recent price surge is the impending “halving,” or the cryptocurrency’s intrinsic function that systematically cuts down the influx of fresh coins into circulation. Specifically, it’s when the block reward, or the incentive for miners to process transactions, gets cut in half.

A halving occurs roughly every four years, and theoretically drives up the price of Bitcoin due to an increased scarcity. The next halving is estimated to take place in mid-April.

History shows that halving events typically lead to a noteworthy boost in Bitcoin’s value. So, the current surge in Bitcoin’s price is likely driven by investors anticipating the upcoming halving, coupled with the growing acceptance of cryptocurrency by regulators and traditional markets.

“More demand plus lower supply should mean the price goes up,” says Blumberg.

While Bitcoin is enjoying a solid bull run that might eclipse its former all-time high, it remains a volatile asset. It isn’t backed by the cash flow of an underlying company, the way stocks are, meaning that the only thing holding up Bitcoin’s value is the mood of other traders. The cryptocurrency is notorious for boom-bust cycles throughout its 15-year history.

“Because it’s not backstopped by anything fundamental such as cash or a company’s profit, Bitcoin is the definition of a sentiment-based trade,” says James Royal, principal writer on investing at Bankrate. “As traders gyrate between optimism and pessimism, as they have in the last few years, Bitcoin has gone parabolic – in both directions.”