(Bloomberg) -- Bitcoin has jumped more than 140% this year to outstrip other investments like stocks and gold, and optimism for further gains is high.

Its stellar performance comes after a turbulent period for the token. Following a crash in cryptocurrencies last year, FTX founder Sam Bankman-Fried is now in jail for fraud, while top exchange Binance and its founder Changpeng Zhao recently pleaded guilty to US anti-money-laundering and sanctions violations and were hit with fines of $4.3 billion and $50 million, respectively.

Is Bitcoin’s return to the $40,000 level a sign the industry is maturing and another bull run is underway, or will the token be derailed again?

Here’s all you need to know:

Why has Bitcoin just hit a 19-month high of almost $41,000?

The token has rebounded on expectations the Federal Reserve will cut interest rates and hopes of greater demand from exchange-traded funds. The last time Bitcoin was at this level was in April last year — before the TerraUSD stablecoin collapse.

The industry is waiting for the outcome of applications from the likes of BlackRock Inc. to roll out the first US spot Bitcoin ETFs. Bloomberg Intelligence expects a batch of such funds to win regulatory approval by January.

And there’s another factor driving the price: Bitcoin halving, which is due to happen next year. More on that shortly.

What’s a spot Bitcoin ETF?

It’s much like any other ETF, but it invests directly in Bitcoin. That will be a first for the US, which to date offers ETFs investing in Bitcoin futures rather than the spot market for the asset. 

It means investors get direct exposure to the current market price of the token.

And what is Bitcoin halving?

It’s where the amount of tokens that Bitcoin miners receive as reward for their work is cut in half. The event happens every four years and is part of the process of capping Bitcoin supply at 21 million tokens. The coin hit records after each of the last three halvings.

For a fuller explanation of halving click here.

What’s the outlook for the price of Bitcoin?

There’s a powerful tailwind behind the token. Optimists point to the drive to curb questionable practices and the flurry of ETF applications as a sign the industry is maturing, and that there’s potential for a wider investor base for digital assets.

Meanwhile, investors are increasingly convinced the Fed is done with rate hikes, which has fueled a rally across global markets.

But a reset in rate bets or unexpected snarls for the planned ETFs could yet derail Bitcoin. Some technical chart patterns, like the weekly relative-strength index, signal “overbought” conditions.

What do the experts say?

Michael Novogratz, the founder and chief executive officer of Galaxy Digital Holdings Ltd., predicts that Bitcoin is poised to reach its former peak a year from now. Bitcoin reached a high of almost $69,000 in November 2021, before retreating 64% last year.

Once the Bitcoin ETF starts trading, Novogratz said that billions of dollars should flow into the ETF space within the first year, if not more. 

Of course, not everyone’s a fan. Charlie Munger, Berkshire Hathaway Inc.’s vice chairman who died last week aged 99, called Bitcoin “noxious poison” and warned that digital assets were “partly fraud and partly delusion.”

“That’s a bad combination,” Munger said in a 2022 interview with CNBC. “I don’t like either fraud or delusion. And the delusion may be more extreme than the fraud.”

©2023 Bloomberg L.P.