New York CNN Business  — 

Remember bitcoin? It’s back. In a big way.

Bitcoin prices have surged nearly 60% to about $6,000 after plunging almost 75% in 2018.

Sure, the cryptocurrency is still far from its all-time highs of just under $20,000, which it hit in December 2017. But crypto investors are increasingly optimistic that the bitcoin (XBT) bounce of 2019 is real and that it and other cryptocurrencies may enjoy a steady march higher.

It may be tempting to declare this year’s bitcoin rebound as another sign of investor insanity. “Uh-oh: Investors are doing it again. Cue the sounds of a bubble being inflated. All we’re waiting for now is the inevitable pffft as the bubble pops.”

But bitcoin may finally be trading at an appropriate price.

Bitcoin going legit

The key for bitcoin going forward is for the gains to moderate a bit so history doesn’t repeat itself. No one wants another bloodbath like in 2018.

“The huge crash in 2018 was a correction after a speculative mania. The gains in 2017 were astronomical,” said Everett Millman, an analyst with Gainesville Coins, an investment firm specializing in precious metals and cryptocurrencies.

Millman thinks some traders are still buying bitcoin because of “hopes and dreams.” But he’s cautiously optimistic that the worst days for bitcoin and other cryptocurrencies are behind them.

So why has bitcoin bounced back so dramatically? Crypto investors increasingly believe bitcoin was oversold last year and is now becoming a legitimate investment for people looking to hedge the risk of currency and interest rate fluctuations.

That could make bitcoin and other cryptocurrencies a solid bet for buy-and-hold investors over the long haul and not just short-term traders looking for a quick pop in price.

“The selling in bitcoin got exhausted last year and people started to come back in around $4,000,” said Tyrone Ross, managing partner with NobleBridge Wealth Management.

“You are now starting to see more people cite bitcoin as a credible asset that you can use to diversify your portfolio. People are looking at bitcoin as a type of digital gold,” Ross added.

But many speculative investments remain tied to bitcoin and blockchain, the digital ledger that tracks cryptocurrency transactions as a public record.

Shares of online retailer Overstock (OSTK), for example, have fallen more than 7% this year as the company struggles to prove to Wall Street that its crypto-related businesses can grow quickly enough to offset the continued losses in its core e-commerce business.

Bitcoin going mainstream

But bitcoin and other cryptocurrencies are going mainstream with both individual investors and larger institutions.

The popular investing app Robinhood now offers investors the ability to buy bitcoin and several other cryptocurrencies. Fidelity and ETrade (ETFC) are reportedly getting ready to launch more crypto investing options for larger clients too.

And ICE (ICE), the owner of the NYSE, has launched Bakkt, a futures exchange for bitcoin and other cryptos. All of this adds legitimacy — and perhaps stability — to bitcoin. It no longer has to be the 21st century market equivalent of the Wild West.

“These solutions will provide infrastructure and services immensely superior to what is currently available in virtually all areas of the cryptocurrency industry. From payments to trading and custody, everything is improving at an impressive rate,” said Fabio Canesin, co-founder of Nash, a cryptocurrency exchange.

Helping crypto’s mass-market appeal, people are actually starting to buy real stuff with bitcoin.

But investors should still expect a lot more bitcoin volatility.

A 30% drop in bitcoin should be considered routine — kind of like a 10% correction in stocks — said Martin Weiss, CEO of Weiss Ratings, an independent financial rating agency that launched a cryptocurrency rating service in 2018.

But Weiss said bitcoin, as well as rival cryptocurrencies, including XRP, ethereum, cardano and EOS, should continue to rise over the long haul. And it wouldn’t be a problem if the pace of the gains begins to slow. In fact, it might be a welcome development.

“Lets not forget that it takes time to get mainstream investors back and attract institutions. That trend is now in place,” Weiss said.

“Bitcoin can gradually crawl back to its all-time highs over several years, but hopefully it doesn’t happen too quickly. If it does, investors could get burned again,” he added.