hit a fresh record high on Monday, continuing the rally from the weekend thanks to strong Japanese demand.
The price of bitcoin hit $4,348.23, setting a fresh all-time high and surpassing the record $4,225.40 hit on Sunday, according to data from industry website CoinDesk. Bitcoin traded about 4 percent higher near $4,282 as of 4:10 p.m., ET.
In the last week alone, bitcoin has added over $15 billion in market capitalization. And year-to-date, bitcoin is up over 320 percent.
Bitcoin three-month performance
There are four major drivers of the current rally.
Japanese yen accounts for over 42 percent of bitcoin buying, according to industry website CryptoCompare.
Regulators in Japan have been very favorable towards bitcoin. Earlier this year, Japan began accepting bitcoin as legal currency with major retailers backing the new law. Department store chain Marui, for example, is testing bitcoin payments in one of its locations.
After fighting within the bitcoin community over the future of the technology, the issue about upgrading the bitcoin network was finally resolved.
The agreement was to increase the transaction size capable on the blockchain, which is the technology that underpins bitcoin.
An upgrade known as SegWit2X is being introduced into the blockchain and this should be implemented in the next few days.
"Segwit2X has undoubtedly been the initial catalyst for this rally removing the uncertainty of how bitcoin is meant to scale," Charlie Hayter, CEO of CryptoCompare, told CNBC by email.
As regulators begin to take a keener interest in bitcoin, institutional investors are also keeping their eyes and trying to find a way to get involved.
This week, Fidelity launched a feature allowing customers to also view their Coinbase bitcoin holdings. The currency also got a boost from Goldman Sachs, which in a report released this week said it is harder for institutional investors to ignore cryptocurrencies like bitcoin.
At times over the past few years, bitcoin appears to have received support during times of geopolitical tension.
Experts say that some of the bitcoin rally is due to the current tensions between North Korea and the U.S.
"At Wirex, we have seen a surge of interest from South Korean customers as they seek bitcoin as a safe haven asset as they anticipate the 'Trump effect' to damage their economy," Pavel Matveev, CEO of cryptocurrency personal finance app Wirex, told CNBC by email.
- Additional reporting by CNBC's Evelyn Cheng.