Bitcoin (BTC-USD) reached an all-time high Tuesday before falling back as some investors locked in their winnings.

A new frenzy surrounding the world’s largest cryptocurrency pushed the price to to $68,991, exceeding the previous high of $68,789 established on Nov. 10, 2021. Then it tumbled below the $60,000 level again in a matter of hours.

The new high reinforced a remarkable comeback for bitcoin following a 2022 crash that created huge losses for investors and triggered the downfall of several big industry players, including cryptocurrency exchange FTX and its founder Sam Bankman-Fried.

The dramatic retreat from Tuesday’s high offered a reminder of how much volatility surrounds this digital asset, putting bitcoin on pace for its worst day since Nov. 9, 2022, just before FTX filed for bankruptcy.

Bitcoin is now riding another wave of excitement sparked by a series of spot bitcoin exchange-traded funds that started trading in January. Those funds gave everyday investors widespread exposure to the digital asset, triggering anticipation of a record-breaking year.

Read more: With bitcoin near $69,000, does it deserve a place in your portfolio?

“The demand for these ETFs far exceeded anyone’s expectations,” Bitwise Asset Management chief investment officer Matt Hougan told Yahoo Finance. Bitwise was among the firms that got the green light from the Securities and Exchange Commission to run one of these funds.

Several money managers are now predicting the digital asset could rise above $100,000 before the end of 2024.

Investors are bidding other cryptocurrencies and related stocks higher too. Ether (ETH-USD), the second-largest cryptocurrency, has outperformed bitcoin by more than 7% since the beginning of the year. Several so-called meme coins — such as dogecoin (DOGE-USD), shiba inu (SHIB), and dogwifhat (WIF) — are also surging.

One sign of the new mania surrounding bitcoin is the trading activity in the ETFs that launched in January. They have pulled in nearly $8 billion from investors in just two months, with the lion’s share going to Wall Street heavyweights like BlackRock (BLK) and Fidelity Investments.

That activity has been a boon to major crypto trading venues, including Coinbase (COIN) and Robinhood (HOOD). Coinbase is the crypto custodian for a number of these ETFs and earns fees tied directly to these products.

The demand for trading on Coinbase was so intense last week that it resulted in a snafu where some customers showed $0 balances in their accounts for part of one day. CEO Brian Armstrong offered assurances to customers that their funds were safe.

Some individual customers reported seeing zero balances in their accounts again on Monday.

There is also a basic law of economics at play in the new market frenzy surrounding bitcoin: supply and demand. Fresh demand from the ETFs means more bitcoins are being bought on average each day than new coins are being created.

The new ETFs have been purchasing a daily average of 3,320-4,300 coins since the beginning of February, three analysts who work for crypto money managers said last week.

That is considerably more than the 900 coins being created daily by the bitcoin network in the same period.

More supply problems are expected for bitcoin this year in light of the “halving” scheduled to take place 46 days from Monday.

When it was created in 2009 by pseudonymous developer Satoshi Nakamoto, bitcoin was programmed with a fixed supply schedule that is cut in half every four years.

After that next cut, the so-called halving, the daily supply of new coins will be 450 instead of 900.

“We are in potentially the sweetest spot right here,” Mark Connors, head of research for crypto asset manager 3iQ, told Yahoo Finance. “We can’t produce more bitcoin to meet demand.”

Connor’s firm has set its mid- to high-range price target for bitcoin this year at between $160,000 and $180,000. Next year, it anticipates an eye-popping target of $350,000 to $450,000 per coin.

Another money manager, VanEck, set an $80,000 2024 price target for bitcoin last quarter.

“Those estimates are admittedly a little stale now,” Matthew Sigel, head of digital asset research for VanEck, said.

There are certainly other factors at work in the current supply crunch beyond the demand from ETFs.

One example: The US government has seized 215,000 BTC since 2020, according to data tracked by 21Shares. The stash includes confiscations in various seizures, such as from the 2016 hack of crypto exchange Bitfinex.

The fact that they are just being held and not sold currently has constrained the supply. But that could change when the government needs to distribute some amount of that to victims, which may mean selling.

As the asset price rises, many institutional buyers will also need to take profits to maintain the balance of their portfolios. That could also impact the supply-demand imbalance.

There are also certainly less fundamental, and more psychological, factors driving this new rally, including the fear of missing out.

Interest in bitcoin across the general US population is far from its peak compared to past rallies, Alex Thorn, head of research for Galaxy Digital, said over email Monday.

Searches for “bitcoin” on Google and retail usage of crypto apps remain well below levels seen throughout the last bull market, according to Thorn.

“We haven’t even begun to reach the heights this is likely to go,” Thorn added.

David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.

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