Bitcoin surpasses its 2021 record and reaches an all-time high of over $69,000.

This year's rally, driven by excitement over bitcoin ETFs and the upcoming halving event, has propelled Bitcoin to a new all-time high after more than two years.

On Tuesday morning, the price of the cryptocurrency reached a high of $69,210 before dropping. It is currently trading at $67,481, which is slightly below its previous record of $68,982.20, set on Nov. 10, 2021, according to Coin Metrics.

"According to Alex Thorn, head of research at Galaxy Digital, Bitcoin's recent reclaiming of its all-time high demonstrates its resilience and permanence. In its 15-year history, Bitcoin has experienced four 75% or greater declines, and each time it has bounced back strongly."

Kaiko's research director, Clara Medalie, stated that a new record is a significant psychological milestone that showcases crypto's resilience and ability to recover from challenges.

"As Bitcoin's value increases, it becomes more practical to use, Thorn stated. With higher market caps and daily float, larger allocations can be supported. Bitcoin's volatility has been steadily decreasing, enabling larger position sizes to be taken."

Since the start of February, the bitcoin market has been driven by significant themes in its narrative, leading to an increase in price.

The surge in cryptocurrency is being driven by the U.S. spot bitcoin ETFs that began trading earlier this year, as well as the tightening bitcoin supply before the late April "halving" event, which aims to create a scarcity around the asset. This week, the flagship crypto's upward trend accelerated.

The crypto industry has faced reputational and regulatory risks for years, with 2022 being the peak of these challenges. Crypto lenders faced pressure, and crypto exchange FTX collapsed. Bitcoin has been working to establish its legitimacy since then.

"Thorn stated that the naysayers who have labeled bitcoin as a "bubble" and compared it to the "tulip mania" in Holland during the 1600s have consistently been proven wrong, as the people continue to demand a decentralized, programmatic, and scarce digital currency."

John Todaro, a Needham analyst, stated that the crypto market may see a resurgence of retail investors.

"High retail interest in cryptocurrencies is often momentum-driven, and even more investment can be triggered by all-time high levels," he said to CNBC. Furthermore, "this could result in more capital flowing into altcoins that become relatively cheaper," he added.

In 2023, crypto, particularly bitcoin, experienced a significant recovery, increasing by 157%. The surge was initially fueled by the regional banking crisis in the U.S., but it was further propelled by speculation that ETFs tracking bitcoin prices would be approved by the Securities and Exchange Commission.

Despite some investors' doubts about the value and legitimacy of the young crypto asset class, U.S. spot bitcoin ETFs, such as BlackRock's iShares Bitcoin Trust (IBIT), have gained immense popularity and reached $10 billion in assets under management last week.

As bitcoin gains momentum, investors should exercise caution when entering the market, as unrealized profits are approaching dangerously high levels.

"Ed Tolson, CEO and founder of Kbit, stated that the market is positioned for a steep correction, possibly ranging from 10% to 20%. Any significant move down will result in cascading liquidations on the crypto perpetual swap markets, where retail has invested heavily in leveraged long positions. This will drive funding rates to become very high. Over the next few quarters, BTC is expected to perform well, but with sharp corrections occurring along the way."

Oppenheimer's Owen Lau agreed.

"Although the rise is happening at a rapid pace, we remain cautious about making any corrections. However, in the long term, there are still factors that support the positive price action."