The price of bitcoin briefly hit a new all-time high of $69,325 on Coinbase on Tuesday morning. It settled below that mark soon after, however, recently trading down 3% over the last 24 hours to $64,324, a gain of 60% over the past month and 187% over the last year. Bitcoin’s previous high of just above $69,000 was reached in Nov. 2021. 

Chainlink co-founder Sergey Nazarov said he expects that this latest move could be the start of an even bigger surge for the world’s largest and oldest cryptocurrency.

“Bitcoin’s price often reaches new highs that are not just small bumps, but large leaps beyond the previous records,” Nazarov told Unchained in an email. “This suggests that we may be at the beginning of a new positive market cycle for bitcoin. When bitcoin’s price surges, it attracts more capital to the ecosystem, which fuels innovation and development within the space.”

Read more: Some Coinbase Users See Zero Balances as Bitcoin Tops $68,000

Jonathan Bier, the chief investment officer at London-based investment management firm Farside Investors, told Unchained that the clearing out of bad debt from bankrupt crypto companies has been one longer term reason for bitcoin’s return to its highs. 

“The recovery appears to be driven by the effective and timely usage of bankruptcy procedures, helping clear out the bad debt, rather than having bailouts, which could have kept zombie companies around for much longer,” Bier said. He added that he thought the other primary reasons for bitcoin’s rally were the demand generated by the recently launched bitcoin ETFs, and favorable treatment of crypto entities by U.S. courts.

The latest price action comes amid a period of heightened volatility as open interest in futures markets for both bitcoin and ether reached record highs—a signal that trading activity is now matching levels last seen in 2021. 

Funding rates, which represent the difference in spot price of an asset and the price of bitcoin perpetual futures, crossed 100% for the first time in a year on Binance. Typically, high funding trades are indicative of greater interest in long trades on leverage, and implies traders are largely bullish in the current market.

The approval of spot bitcoin exchange-traded funds (ETFs) in January has largely been the driving force behind the enhanced interest in the space. So far, the 10 funds have seen close to $8 billion worth of net inflows, with BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity Investments’ Wise Origin Bitcoin Fund (FBTC) accounting for nearly 80% of all inflows.

Read more: BlackRock’s Spot Bitcoin ETF IBIT Fastest Ever to Hit $10 Billion in Assets

Bullish Projections

Bitcoin’s trajectory over the last few weeks makes some analysts’ wild price predictions seem less out of reach. In January, Standard Chartered shared a revised price target for bitcoin over $200,000 by the end of 2025. 

It is worth noting that the last time bitcoin broke its previous cycle’s all-time high, the price of the asset more than tripled in 103 days. If history were to repeat itself, this would put bitcoin’s price at $213,000 this June. 

While bitcoin’s price is now officially in the same territory as the last bull market, some industry watchers believe that the full effects haven’t taken shape just yet after comparing data across cycles.

“Data on our platform suggests we aren’t yet in full ‘bull’ market. While activity, logins, trading is up, we aren’t yet near 2021 data. Do with that information what you will,” said Caroline Bowler from BTC Markets.

How Did We Get Here?

After bitcoin euphoria reached a fever pitch in November 2021, a seemingly perfect storm of unfavorable global macroeconomic conditions, greed, and never-before-seen levels of fraud wiped out approximately 77% of the asset’s value.

“Bitcoin reached a low of around $15,632 post the 2021 bubble,” said Farside’s Bier. “This low was driven by the carnage following the failure of most of the crypto lending businesses and the bankruptcy of FTX.”

The challenged U.S. economy also has played a role.

According to former Federal Reserve Chairman Ben Bernanke, supply chain disruptions during the Covid pandemic persisted in 2022, causing price spikes due to increased demand and reduced supply. The result was runaway inflation peaking at 9.1% in June 2022. That year, the stock market had its worst performance since 2008 and bitcoin, which has become correlated with traditional assets, didn’t fare much better.

Greed and Fraud

One of the earliest warning signs of an impending crypto winter came in May 2022 when – as alluded to by Bier – algorithmic stablecoin TerraUSD (UST) depegged from its standard $1 to mere cents, sending its sister token LUNA crashing from a record $120 to less than a dime in a month. Stablecoins are supposed to maintain a consistent value (one U.S. dollar in this case), which UST failed to do.

The collapse of the Terra network wiped out billions and triggered a domino effect of events that contributed to the downfall of several crypto entities, including hedge fund Three Arrows Capital (3AC), which had invested $200 million in LUNA, according to the Wall Street Journal.  

Crypto brokerage firm Voyager was the next casualty, filing for bankruptcy in June 2022 after 3AC defaulted on a massive $670 million loan issued by Voyager. A month later, crypto lending firm Celsius Network followed suit, citing liquidity challenges as it also entered insolvency.  

Other bankruptcies would follow, but perhaps none would be more catastrophic than the disastrous implosion of crypto exchange FTX. Dubious activity on the exchange’s balance sheet led to run-on-the-bank style withdrawals that eventually forced FTX into a high-profile bankruptcy in November 2022.

Bitcoin fell below $16,000 shortly afterwards. “It really is the classic story of a lending bubble,” said Bier.

The Revival

The dominant cryptocurrency continued to flounder until April 2023 when it suddenly started rallying, briefly topping $30,000.

But the real catalyst may have taken place on June 15, 2023 when BlackRock – the world’s largest investment manager – filed for a bitcoin spot ETF with the U.S Securities and Exchanges Commission (SEC).

Other well-known firms such as Fidelity, Invesco, and Franklin Templeton also filed, and 11 historic approvals were issued on January 10, 2024.   

With several bitcoin ETFs all simultaneously resuming operations, it was only a matter of time before demand triggered a bull run, which is where we are today.

Bier didn’t provide Unchained with any bitcoin price predictions for the remainder of the year. However, he did point out potential pitfalls of excessive price appreciation given the bloodbath seen in 2022.

“Higher crypto prices can make the economy too hot,” he said. “Regulators would, of course, also be concerned about the impact of the next crypto crash.” 

Sage Young contributed reporting for this article.

UPDATE (March 5, 2024 12:39 p.m. ET): Updated with information and quotes throughout.