(Bloomberg) -- The combined value of the cryptocurrency market has jumped to around $2 trillion for the first time on almost two years on the back of the ETF-fueled rally in Bitcoin. 

The largest digital asset, which data from CoinMarketCap.com shows accounts for about 52% of the entire market, rose as much as 5.1% to $57,443 on Tuesday. Bitcoin has surged around 12% already this week, and is trading at the highest level since December 2021. The value of the crypto market reached around $2.7 trillion a month earlier, when token prices were at all-time highs.

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Bitcoin’s price has increased 32% since the turn of the year, extending a prolonged rally that has also stoked speculative appetite for smaller tokens like Ether and Dogecoin. 

A net $6.1 billion has poured into a batch of landmark Bitcoin exchange-traded funds that began trading in the US on Jan. 11, signaling widening demand for the token beyond committed digital-asset enthusiasts. An upcoming reduction in Bitcoin’s supply growth, the halving, is adding to the optimistic sentiment.

MicroStrategy, an enterprise software firm that buys Bitcoin as part of its corporate strategy, said Monday that it had purchased another 3,000 or so tokens this month. The company now owns about $10 billion in Bitcoin.

Read more: MicroStrategy Purchases Another 3,000 Bitcoin for $155.4 Million

“We do not expect a major pullback from Bitcoin given its breakout and positive intermediate-term momentum,” Katie Stockton, founder of Fairlead Strategies, wrote in a note.

The combined value of digital assets now stands at roughly $2.2 trillion, according to CoinGecko, compared with a low of about $820 billion during the bear market of 2022 when FTX and other crypto platforms collapsed. Coinglass data show that about $162 million worth of crypto trading positions betting on lower prices have been liquidated over Monday and Tuesday — one of the biggest two-day tallies since at least Nov. 30.

Rising Yields

Digital tokens are jumping even though investors have pared back expectations for looser monetary policy this year, evidenced by a rise in US Treasury yields. 

“Bullish momentum in crypto is unfolding despite an uptick in rates,” Fundstrat Global Advisors Head of Digital-Asset Strategy Sean Farrell wrote in a note.

Bitcoin has outperformed traditional assets like stocks and gold this year. A ratio comparing the price of the token to the precious metal is at the highest level in more than two years.

Shares of crypto-related companies gained in the US on Monday. MicroStrategy rose 16%, trading platform Coinbase Global Inc. increased 17% and miner Marathon Digital Holdings Inc. jumped 22%. The positive sentiment spread to Asian stocks related to digital assets, including advances Tuesday in companies such as Japan’s Monex Group and Woori Technology Investment Co. in South Korea.

The massive inflows into Bitcoin ETFs have prompted some industry watchers to warn of a looming supply squeeze as miners fail to generate enough coins to keep up with demand. Some 80% if Bitcoin’s supply hasn’t changed hands in the past six months, potentially exacerbating the squeeze and adding to the upward price pressure, according to Julius Baer digital-assets analyst Manuel Villegas. 

After the token’s so-called halving in April — where the block reward for miners will shrink to 3.125 Bitcoin from 6.25 Bitcoin — overall supply will fall further and the shortage “would reach aggravated levels,” Villegas said in a note on Tuesday. 

“All in all, we see a very sound fundamental backdrop for Bitcoin and believe that prices are well supported around current levels with further upside potential,” Villegas wrote. 

Read more: Bitcoin Pundits Tout a Supply Shortage While Liquidity Increases

--With assistance from Emily Nicolle and Terrell Holt.

(Updates pricing in second paragraph, adds comment from Julius Baer in final paragraph.)

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