Bitcoin has once again hit an all-time high, surpassing $68,800 less than two years after the collapse of the crypto exchange FTX severely damaged faith in digital currencies and sent prices plunging. The world's largest cryptocurrency jumped 4% this week, briefly reaching the new record on Tuesday, according to CoinMarketCap. Despite a slight dip, with the price standing at just under $62,000 as of 3 p.m. ET, it is still up more than 175% from one year ago.

The recent gains in Bitcoin's price have been driven by the approval of bitcoin exchange traded funds earlier this year, which opened up access to a wider range of investors. The Securities and Exchange Commission approved the first spot bitcoin ETFs from asset managers such as Blackrock, Invesco, and Fidelity. These newly approved ETFs hold actual bitcoin, unlike previous bitcoin-related ETFs that were invested in contracts related to future price bets, but not the cryptocurrency itself.

Institutional demand for bitcoin continues to grow, with H.C. Wainwright's Mike Colonnese and Dylan Scales estimating that the 10 bitcoin ETFs averaged $302 million in net daily inflows for the month of February. Last week alone, these spot ETFs saw record inflows of $1.7 billion, bringing total net inflows to $7.5 billion since their launch in January.

The increased demand for bitcoin is also aligning with the upcoming halving event expected at the end of April. Bitcoin halving occurs every four years, reducing the reward for bitcoin mining and making the supply scarcer. While analysts predict that constrained supply in a time of high demand could push bitcoin's price higher, others warn of significant volatility and the possibility of sizable declines.

Despite the recent excitement around bitcoin, experts caution that crypto remains a risky bet with wildly unpredictable fluctuations in value. Rajeev Bamra, senior vice president of digital finance at Moody's Investors Service, emphasized the importance of exercising caution and acknowledging the volatility of the digital finance ecosystem. Investors should approach the crypto market with cautious optimism, as the road ahead is expected to be marked by uncertainty.