Bitcoin was trading at around $8,750 (£6,700, €7,800) at midday (GMT) on Wednesday, 15 January, slightly down after its recent surge but still well ahead of the psychologically important $8,500 barrier.

That means Bitcoin has posted gains of more than 20 per cent since the start of 2020, its best performance in January for eight years. Other cryptocurrencies, like Ethereum, have also made significant gains in the first two weeks of the new year.

The surge is reviving memories of 2017, when Bitcoin hit record highs of nearly $20,000, before tumbling to just $3,000 in late 2018.

Analysts are suggesting a number of reasons for the turnaround, which has seen Bitcoin breaking a near six-month downward spiral.

Perhaps most important is the emergence of new trading options, and especially the exchange-traded Bitcoin options that debuted on the Chicago Mercantile Exchange (CME) on Monday. These are a way for institutional investors to buy Bitcoin.

Analysts mention US-Iran tensions, which may have promoted cryptocurrencies as safe haven assets in a time of market turbulence, and the upcoming “halving” event in May.

Halving is a process that limits the amount of Bitcoin coming on to the market, driving up prices. Halving happens every four years and is written into bitcoin code. Previous events have led to significant price increases.

FURTHER READING: Bitcoin prediction this week January 13 – 19. Coin likely to rally to $8,500 soon

FURTHER READING: Ethereum price analysis : on the sidelines