The world's most recognisable cryptocurrency is taking risk-taking investors on another rollercoaster, with bitcoin setting a new record price overnight before plunging in value again mere hours later.
The latest price cycle is cause for celebration for those who've just turned a profit, while crypto-cynics are describing this as the latest crash and burn cycle of a "zombie" asset that won't die.
Bitcoin touched $US69,202 overnight at about 2am AEDT, surpassing its last peak in November 2021 by just over $US200.
It then quickly dropped by 14 per cent, briefly falling below $US60,000 shortly before 7am AEDT, before recovering much of that drop.
At 3:20pm AEDT, Bitcoin was trading around $US63,630.
"It's an incredibly volatile financial asset," RMIT Blockchain Innovation Hub co-founder Chris Berg told ABC News.
"It's always been incredibly volatile."
In between this peak and its last high in late 2021, bitcoin crashed to as low as around $US16,000.
That was amid the fall-out from the FTX scandal, the "death spiral" of the Luna stable coin, and general cynicism in some quarters that cryptocurrencies were a flash in the pan.
Is the 'halvening' behind this price surge?
Bitcoin was created in 2008 by Satoshi Nakamoto, as part of a push to establish a digital currency that allows people to pay for things without using state-backed "fiat" currencies like the Australian dollar or US greenback.
The coins have a ledger called a blockchain that records their transaction information.
So-called "miners" link up or verify these transactions by solving complicated puzzles, and are in turn rewarded with new bitcoin.
The mining process is very energy-demanding and is increasingly being done by large companies that can access cheap or renewable power in locations such as Canada.
The amount of bitcoin given to miners for their work has been dropping over time. Roughly every four years, the amount of bitcoin that miners are given for their work is halved.
This so-called "halvening" event has previously occurred around the same time as price spikes. Some analysts argue that a looming shortfall after a halvening drives investors to get into the market.
The next halvening is currently expected in May this year.
However, Professor Berg doesn't believe this looming event is a major factor in the current bitcoin surge cycle and the supply put into the market by miners is now relatively small.
Supply of bitcoin is limited to 21 million, of which 19 million have already been mined.
"The miners aren't as big a part of the market. They're not the biggest holders as in previous eras," he says.
"(The halvening) will definitely have an effect at the margin. I don't think it's going to dominate the trajectories."
The crypto-enthusiast believes a bigger event pushing up bitcoin prices is the recent decision by regulators in the United States to approve 11 applications for exchange traded funds (ETFs) tied to bitcoin.
Put simply, these ETFs will allow ordinary investors (and also the uber rich) to invest money into funds that have bought up bitcoin and are holding it in custodians, like Coinbase.
That would be rather than investors directly buying pieces of crypto coins through so-called wallets, which are still usually hosted by financial companies.
One of the 11 approved for an ETF is the world's largest asset manager Blackrock.
Even talk that Blackrock had applied for a crypto ETF last year was enough to rally the market in 2023, some analysts argued at the time.
"Overwhelmingly, the biggest issue here is the ETFs in the US," Professor Berg says.
Is crypto just going more mainstream?
As well as bitcoin, other types of cryptocurrencies have also been rising again.
Over in the US, analysts say this type of asset is just generally going more mainstream.
"We've been fielding more questions from the field on bitcoin," David Wagner, a portfolio manager at Aptus Capital Advisors, told Reuters.
"Especially now that there are more efficient and cheaper ways to own bitcoin after the recent slew of ETF launches."
In addition to demand from a wider pool of investors, some analysts say cryptocurrencies generally have gotten a boost from the prospect of central banks cutting interest rates.
Lower interest rates – which are predicted for here in Australia by the end of 2024 or early 2025 – could prompt investors to divert capital into assets that are higher yielding or more volatile.
It also lowers the opportunity cost of parking money in assets that don't deliver a stream of income, such as bitcoin or gold.
"One part of [bitcoin's rally] has to do with the generally positive sentiment on risk in general," Alvin Tan, head of Asia FX strategy at RBC Capital Markets, told Reuters.
"You can see that in the all-time high in the S&P 500 and Nasdaq.
"(Cryptocurrencies) are now being used as an alternative to using gold when markets are looking to hedging against increased risks, higher interest rates," Stuart Cole, chief economist at Equiti Capital, added.
"So no surprise I think that when you see the gold price rallying, cryptos are doing the same."
Asian investors are leading the surge
While much of the chatter about bitcoin and crypto has been dominated by talk of ETF approvals in the US, data shows it is investors in Asia that are leading the surge.
Traders in South Korea, China and other Asian countries are responsible for roughly 70 per cent of bitcoin trading volumes, much like they were in 2021 when bitcoin last hit such heady highs, according to crypto exchange data from The Block.
Asia accounted for $US791 billion of the $US1.17 trillion worth of bitcoin traded in February, with North American investors lagging way behind with $US113 billion, broadly reflecting a trend seen since November, the data shows.
In China, "fear of missing out" or FOMO has gripped many small investors frustrated with an anaemic stock market. On popular messaging app WeChat, searches for "bitcoin" jumped 12-fold in February.
But then why did bitcoin plunge again?
Professor Berg wasn't surprised that bitcoin hit a new record and then plunged again shortly after.
"There's sort of an exuberance and then a pullback," he says.
"That's not necessarily an indication of anything substantial, and I would expect it to be back growing again relatively soon.
"It's a risky asset and I'm not a financial manager, and I would never recommend anybody invest anything that they're not willing to lose."
Professor Berge says bitcoin's up and down cycle has now been going on so many years, that this itself shows these assets are now entrenched in financial markets.
However, cynics aren't convinced by this logic.
"To me, bitcoin remains a speculative bubble," the University of Canberra's John Hawkins says.
The London School of Economics graduate argues that — unlike property investment where you get a house, or stocks that are tied to a company which might produce profits — cryptocurrencies have no inherent income-generating asset behind them.
"(Bitcoin) was designed over a decade ago to be a payment instrument, but almost no shops accept it and almost nothing is priced in it and it is far too volatile to be a store of value or inflation hedge," he told ABC News.
"It generates no income. People only buy it because they think they can later sell it at a higher price; the classic speculative bubble.
"Bitcoin (and other crypto such as Ether and Dogecoin) are like Zombies which come back from the dead. But they remain very volatile.
"In the past we have seen cycles where bitcoin price goes up and down by over 80 per cent in a period of months.
"The main apparent driver for the recent bitcoin price rise is the approval in the US of exchange traded funds based on bitcoin.
"These allow punters to speculate on bitcoin without being tech-savvy enough to have bitcoin 'wallets'. It does not explain why the prices of thousands of other crypto have also gone up."
Editor's note: An earlier version of this story stated that Bitcoin was sitting at $US98,058 at 11:20am AEDT. This was actually the Australian dollar value of one bitcoin at that time.
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