Bitcoin shot up more than 21 per cent in just five days.

It hit US$63,913 (S$85,904) at about 1am (Singapore time) on Feb. 29, putting it 8.8 per cent shy of its all-time high of around US$69,000 (S$92,741) set in November 2021.

In other words, a diamond hands bitcoin buyer who bought the token at its peak and held it till this latest bull run would still see an unrealised loss — but of only about 8 per cent.

Bitcoin famously crashed to US$15,599 (S$20,966) in November 2022, wiping out many retail traders who bought into the frenzy a year earlier.

However, those who bought in at the November 2022 trough would have seen more than 300 per cent gains now.

Impetus for rally

The latest rally is partly driven by billions of dollars funnelled into the cryptocurrency after the U.S. Securities and Exchange Commission approved bitcoin exchange-traded funds in January 2024, CNN alongside many others reported.

The other major factor at play is the upcoming bitcoin “halving” event, which takes place roughly every four years, or specifically after 210,000 blocks have been “mined”.

Halving refers to the built-in feature of bitcoin that automatically reduces the rate of new coins entering circulation.

Bitcoin miners will see their bitcoin-denominated reward cut in half when a threshold is reached.

The reward is incentive for running programmes used to solve complex math problems that are intrinsic to using the token.

In other words, when a miner mines bitcoin, they’ll receive less bitcoin than they did before when a halving kicks in.

In theory, a halving event pushes the price of bitcoin higher because it creates more scarcity of a finite currency.

Scarcity is one of the key features of bitcoin when it was created and as hashed out in its white paper.

But there’s no hard rule that a price increase would take place again as bitcoin is also sensitive to regulation.

Coinbase, a crypto exchange platform, experienced major outages as a result of the surge in trading during this latest rally.

Top photo via Unsplash