Is Crypto Back? What you need to know about the rise of Bitcoin.

Cryptocurrency enthusiasts celebrated Tuesday as Bitcoin’s price hit an all-time high of more than $69,000. For believers, it was a moment of vindication after an industry recession in 2022 that bankrupted several major companies and tarnished crypto’s reputation.

But is crypto really back from the dead? While the numbers suggest the sector is starting to boom again, there are big differences between this bull run and the euphoria that drove crypto prices to previous highs.

Here’s what you need to know about the new crypto wave.

Why have cryptocurrencies collapsed in the past?

The last time Bitcoin hit an all-time high was November 2021, when cryptocurrencies became a cultural phenomenon. Crypto executives hung out with celebrities and their companies ran massive marketing campaigns with Super Bowl commercials.

Prices crashed in the spring of 2022, when some of the most prominent crypto companies were exposed as fraudsters. People who had invested their savings in crypto lost everything. The decline culminated in November 2022, when the crypto exchange FTX, founded by Sam Bankman-Fried, collapsed after the equivalent of a bank run, costing customers $8 billion.

Since then, Bitcoin has been in a slump. After hitting a low of around $16,000 following the implosion of the FTX, the price of the virtual currency has risen to $69,000.

How did Bitcoin recover?

A major turning point for the crypto industry came in August, when a court ruling cleared the way for financial companies to offer new investment products tied to the price of Bitcoin. The products, called Exchange-Traded Funds or ETFs, offered investors a way to dabble in cryptocurrencies without owning them directly.

Essentially, an ETF is a basket of assets divided into shares. Investors buy the shares, rather than the assets themselves. The introduction of Bitcoin ETFs meant that cautious investors could dip their toes into the crypto markets without having to worry about setting up a digital wallet or entrusting savings to a dubious-sounding startup.

The impact was immediate. Since the ETFs hit the market in January, more than $7.5 billion in investments have flowed into them, pushing up Bitcoin’s price.

What’s different about this increase?

When crypto took off in 2021, its rise was at least partially fueled by everyday investors, cooped up during the pandemic, who turned to online investing as a new hobby. They bought up so-called memecoins, cryptocurrencies based on online jokes, and stored their digital savings in newfangled crypto banks with sketchy business models. Non-fungible tokens, the crypto-based collectibles known as NFTs, also rose in price.

This time, Bitcoin is leading the way. Other tokens have also risen in value, but without reaching their previous heights (although there is some renewed interest in memecoins). And the Bitcoin run-up has been driven by support from major financial institutions such as BlackRock and Fidelity, both of which offer Bitcoin ETFs.

“It’s definitely very different” than 2021, said Michael Anderson, founder of crypto investment firm Framework Ventures. “It is possible that this will become an institutionally led cycle.”

Is crypto really back?

Crypto boosters claim Bitcoin’s rise is just the beginning. They foresee months of significant gains that could push the cryptocurrency’s price above $100,000.

Even if they are right, that doesn’t necessarily mean the broader industry will prosper. Federal regulators have more or less made peace with the fact that people in the United States are trading Bitcoin. But they have been hostile to other digital currencies and the platforms that offer them.

The Securities and Exchange Commission has filed lawsuits against Coinbase, the largest U.S. exchange, and several other major companies. The outcomes of these cases, which are still pending in the courts, could determine whether crypto can continue to grow in the United States.

“This industry moves in cycles,” said John Todaro, crypto analyst at Needham. “I don’t know if it will return to the levels we saw in 2021 because there are checks and balances in play now.”