Up 145% in a year, the Bitcoin price just smashed through 18-month ...

The Bitcoin (CRYPTO: BTC) price has shaken off its 2022 malaise and charged higher in 2023, with much of the outsized gains coming since mid-October.

At the time of writing BTC is trading for US$41,875 (AU$62,706).

That sees the world's top crypto up 145% over the past 12 months and trading at its highest levels since April 2022.

So, what's going on?

"Bitcoin has bounced back with a vengeance in 2023," says Josh Gilbert, market analyst at eToro.

One of the tailwinds aiding the Bitcoin price in recent months is the increasing likelihood that the United States Securities and Exchange Commission will approve a number of pending applications to launch exchange-traded funds (ETFs) that can directly buy the token. Or so-called, spot BTC ETFs.

Gilbert notes the excitement surrounding the pending SEC decision "have helped the biggest and oldest cryptocurrency break out of a trading range it had spent the previous three weeks".

He adds, "The potential for multiple ETF approvals in January could open the door for trillions of dollars to flow into bitcoin in the future."

A separate tailwind sending the Bitcoin price soaring is the growing belief that the US Federal Reserve is not only done with its tightening cycle but that the world's most influential central bank will begin to cut interest rates in 2024.

Bitcoin proved highly susceptible to higher interest rates last year, falling sharply alongside other high-risk, growth assets.

Bitcoin is one of those nebulous assets where bears are still forecasting it will eventually be worthless while bulls are still aiming for the sky.

After the strong run over the past months, some supporters are now dusting off their forecasts that the Bitcoin price will soon surpass US$50,000 and eventually exceed US$500,000.

But Matt Maley, chief market strategist at Miller Tabak & Co, cautions investors against overexuberance.

"It's getting crazy again. Those kinds of comments show just how quickly sentiment can change for this asset class," he said (quoted by Bloomberg).

And Maley has a different take on why the Bitcoin price had such a strong run in 2020 and 2021, eventually seeing the token hit all-time highs of US$68,790 on 10 November 2021.

According to Maley:

I would argue that one of the most important reasons Bitcoin rallied so strongly in 2020 and 2021 was because of the massive influx of liquidity into the system due to the pandemic. Without another huge liquidity program, some of those predictions are a pipe dream.