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Bitcoin rose above $63,000 for the first time since November 2021 on Wednesday morning, buoyed by a surge in trading activity in spot bitcoin exchange-traded funds this week.

Also lifting investor appetite for the token: A reduction in its supply growth, an event known as its "halving," slated for April.

The largest cryptocurrency has staged a massive comeback since it traded at around $20,000 just under a year ago. Bitcoin (BTC) prices are up around 45% since the beginning of the year and have soared from $42,000 to more than $60,000 in a matter of weeks.

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This latest price increase in the digital asset comes as activity around spot bitcoin ETFs hit levels not seen since these fundswhich opened up bitcoin to a whole new swathe of retail investorsstarted trading in January. The new nine spot bitcoin ETFs, which only excludes the preexisting Grayscale Bitcoin Trust (GBTC), hit a new all-time high for trading volume on Monday, according to Bloomberg Senior ETF Analyst Eric Balchunas.

Blackrock's (BLK) iShares Bitcoin Trust (IBIT) broke its own trading volume records on both Monday and Tuesday.

In addition to the obvious hype around the spot bitcoin ETFs, a recent report from Grayscale Advisors LLC pointed to the upcoming bitcoin halving event as a key factor driving bitcoin prices. Slated to occur in April, the halving will cut the supply of new bitcoin created per block as well as the rewards for bitcoin miners in half.

With the supply of bitcoin capped at 21 million and more than 19.6 million already in circulation, halving will slow supplyfeeding the token's scarcity.

The halving is also likely to affect returns of bitcoin mining stocks, which have recently enjoyed stellar gains.

Bitcoin's rally has lifted the whole cryptocurrency space. According to CoinGecko data, the market capitalization of the entire cryptocurrency market has surpassed $2 trillion for the first time since April 2022. Bitcoin accounts for nearly $1.2 trillion of that.

The crytpo market's gains haven't matched the pace of bitcoin's this year, although ether (ETH) recently broke through the $3,000 mark for the first time since April 2022.

Crypto-focused stocks, such as Coinbase (COIN) and Riot Blockchain (RIOT), have also hit new year-to-date highs during this latest rally. Notably, software-intelligence firm Microstrategy (MSTR) now holds more than $11 billion worth of bitcoin on its balance sheet.

Read more:
Bitcoin Crosses $63K as ETF Volumes Soar and 'Halving' Nears - Investopedia