Republished with full copyright permissions from The San Francisco Press.

As the stock market experienced a downturn, the price of bitcoin surged to a new high on March 11, surpassing $72,000 per token. This dramatic rise marked the latest in a series of significant milestones for the cryptocurrency, signaling a remarkable turnaround after more than two years of struggling to approach its previous record.

However, amidst the steady climb in bitcoin’s value, the inherent volatility of the cryptocurrency remains evident. Price fluctuations, often with no immediately evident cause, continue to characterize its behavior. For example, a nearly 10 percent jump in bitcoin’s price from March 3 to March 4 was followed by a substantial retraction by March 5, highlighting the unpredictable nature of this digital asset.

Part of the recent surge in bitcoin’s value can be attributed to the SEC’s approval of the first bitcoin exchange-traded funds in January. This regulatory milestone has facilitated easier and less risky access for both individual and institutional investors, resulting in a substantial influx of capital into the bitcoin market. Moreover, the recent green light given to a new crypto-backed investment vehicle in the United Kingdom is poised to further drive investments in bitcoin and other cryptocurrencies.

While the surge in bitcoin’s price has undoubtedly pleased current investors, it raises questions about the sustainability of this growth. The increased demand for bitcoin has been a key driving force behind its soaring value, but concerns persist about whether this demand will persist in the long term. Despite the limited supply of bitcoin, questions remain about its inherent value and its ability to maintain its market value indefinitely.

Financial firms have set ambitious price targets for bitcoin, citing potential use cases such as serving as a hedge against inflation, facilitating global payments, and acting as a store of value outside of traditional financial systems. However, challenges persist in substantiating these use cases, particularly in light of bitcoin’s limited practical utility for everyday transactions and the lack of intrinsic value underpinning its price.

Some analysts have also pointed to the upcoming “halving event” in April as a potential driver for ambitious price targets. This event will restrict the supply of newly minted bitcoins, potentially bolstering the cryptocurrency’s price in the short term. However, questions remain about the long-term viability of a market reliant on perpetual demand outstripping supply, especially in the absence of widespread practical applications for cryptocurrency beyond illicit activities.