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Bitcoin's Price History: Breaking Down BTC's Highs and Lows

Bitcoin (BTC) is still new compared to traditional assets like stocks, bonds, and gold. As with any new market, those who invested early in Bitcoin faced intense volatility, but they have been rewarded for their patience. Even diehard Bitcoin believers may have had a difficult time imagining this digital currency could surpass a $1 trillion market cap 12 years after its launch. 

Bitcoin's price history mirrors the history of global crypto adoption, and analyzing it can help investors appreciate the volatile nature of investing in these digital assets.

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Analyzing Bitcoin's price history by year

Bitcoin's price action may look random, but many peaks and dips in BTC's chart have logical explanations. 

2009-2011: Breaking the $1 level

When Satoshi Nakamoto launched the Bitcoin Network in 2009, it was free to mine BTC. Anyone interested in downloading Bitcoin's proof-of-work (PoW) algorithm on their computer could mine BTC rewards. At the start of Bitcoin's history, Nakamoto set these block rewards at 50 BTC per block (or about $850,000 at today's prices).

The first recorded transaction of Bitcoin between Nakamoto and early BTC adopter Martti Malmi valued each BTC at just $0.0009. It wasn't until July 2010 that Bitcoin started to trade for $0.09 per coin. One year later, BTC finally broke the $1 level. Once BTC hit $1, it went on a significant bull run up to $30 per coin. 

2012-2016: The first four-figure Bitcoin

While Bitcoin remained relatively steady in 2012, it rose for the first time to $1,200 in 2013. At this time, although cryptocurrencies were still far from mainstream, it was becoming easier for retail investors to purchase BTC online. Early exchanges like Bitcoin China and Mt.Gox offered convenient access to crypto liquidity. Companies like Bitmain also started producing its ASIC computer rigs specifically for Bitcoin mining. 

However, Bitcoin’s value began to weaken after crossing the $1,000 mark. A significant reason for Bitcoin's tumble in 2014 was related to the infamous Mt.Gox hack. Due to poor security standards, hackers stole 850,000 BTC from the exchange. Since Mt.Gox was the world's most-used Bitcoin exchange at the time, news of this hack shattered confidence in the world's largest virtual currency. 

Concurrently, the Chinese government issued its first Bitcoin ban. While China didn't entirely outlaw crypto trading, it banned banks from storing or using digital assets like Bitcoin. News of this crypto restriction sent Bitcoin as low as $315 during the 2014-2016 "crypto winter." Bitcoin would have to wait until 2017 to hit the $1,000 mark again. 

2017-2018: ICO crypto bull run

Bitcoin gained more mainstream attention in 2017 when it broke its previous all-time high of $1,237. By the end of 2017, Bitcoin hovered just below $20,000 per coin before falling into a multiyear bear market

A few explanations behind the 2017 Bitcoin bull run exist. Bitcoin's second "halving event" occurred on July 9, 2016. A halving event occurs every fours wherein the BTC that enters circulation is cut in half. If demand for Bitcoin remains the same or increases after a halving, it tends to cause a price spike. 

Another reason people became interested in crypto in 2017 is Ethereum (ETH). Unlike previous altcoin projects like Bitcoin Cash (BCH) and Litecoin (LTC), Ethereum wasn't trying to compete with the Bitcoin blockchain. Instead, the Ethereum team wanted to create a blockchain that could "decentralize the web." Using self-executing commands called smart contracts, Ethereum allowed developers to create dApps (decentralized apps) with dozens of use cases. 

The excitement surrounding Ethereum's technology led to an increase in cryptos called ICOs (initial coin offerings). Countless new crypto projects offered these digital tokens to fundraise their operations. Some companies during the ICO craze were legitimate, but many were scams. As speculation increased in the ICO sector, countries like China and the U.S. stepped in to address the security and legal issues associated with ICOs. 

2019-2021: Crypto winter and the COVID-19 Pandemic crash 

Like most other asset classes, the price of Bitcoin crashed as more nations enforced COVID-19-related lockdowns. In March 2020, one BTC’s price fell from approximately $10,000 to less than $4,000. However, in the months that followed this sharp decline, Bitcoin went on its most impressive bull runs. 

After breaking through the significant $20,000 level in late 2020, Bitcoin continued climbing until it became worth more than $60,000 in March 2021. Although Bitcoin plunged to $30,000 in the summer following news of China's Bitcoin mining ban, BTC's hash rate steadily increased as miners resumed operations in the U.S. and Kazakhstan. Bitcoin rose to more than $60,000 per coin in November 2021 before showing signs of weakness. 

Bitcoin's 2021 price surge resulted from many factors. Bitcoin had another halving event on May 11, 2020, which reduced the block rewards to 6.25 BTC. There was also increased interest in speculative investments during the COVID-19 lockdowns. In addition to crypto, many high-risk tech IPOs (initial public offerings) and SPACs (special-purpose acquisition companies) soared to 52-week highs on the U.S. stock market. However, as COVID-19 restrictions lifted and more nations posted record-high inflation, more money began to exit high-risk investments. 

The aftermath of 2021: From bull to bear market  

The crypto market struggled to carry the euphoria of 2021 into 2022. Many major crypto companies and projects like Terra Luna, Celsius Network, and Three Arrows Capital collapsed. Also, in November 2022, mainstream crypto exchange FTX filed for bankruptcy. The failure of these prominent crypto firms exerted immense sell pressure on BTC’s price. 

Before FTX’s collapse news, Bitcoin had been trading for approximately $20,000 per coin, and following the bankruptcy filing, it fell to an average price of about $16,500.

What makes Bitcoin's price history so volatile?

Bitcoin is famous for its erratic price fluctuation. Unlike other assets, it's common for Bitcoin to have more than 20% moves higher or lower in a matter of days. Here are a few factors that may help explain this volatility:  

  • A new and untested technology: Bitcoin may be the longest-running cryptocurrency, but it remains a speculative asset. New and unproven technologies are always riskier investments than blue-chip companies, government bonds, or precious metals. 
  • Relatively low market cap: The Bitcoin blockchain may have the highest market cap in crypto, but it's still not as impressive as established assets like gold, silver, or the S&P 500 Index. The lower an asset's market cap, the easier it is to move the price with less capital. 
  • BTC halving events: As Bitcoin's issuance drops by half every four years, it tends to significantly impact crypto prices. A few months after Bitcoin's previous halvings, the crypto market entered a parabolic bull phase, followed by a sharp decline. There's no guarantee these previous cycles will repeat, but many crypto investors believe the "BTC supply shock" explains its boom-and-bust price patterns. 

How do investors use Bitcoin's price history? 

It's easy to look at Bitcoin's price history and pick ideal buying and selling opportunities. While prior price action can't predict the future, many crypto investors use Bitcoin's historical chart to plan their future BTC strategy. Patterns and trends on Bitcoin's price chart may be useful for technical analysis. 

  • Four-year halving cycles: The "four-year cycle theory" is the most common pattern crypto traders have identified on Bitcoin's price chart. According to this hypothesis, Bitcoin rises a few months after the halving, only to fall after an unsustainable rally. While this theory has proven correct in the prior halving cycles, remember it's still only a theory. If demand for Bitcoin declines, the supply shock of a halving won't lead to an increase in price. 
  • Previous all-time highs: Although Bitcoin's price to USD usually falls after a post-halving bull run, it tends to stay around previous all-time highs. Again, this doesn't mean Bitcoin will never fall lower than the highs in previous halving cycles, but many technical traders watch these levels carefully.  
  • Historical support and resistance zones: Some price levels on Bitcoin's chart have served as historical zones of support or resistance. For example, $20,000 was a zone of extreme resistance before Bitcoin finally broke through in the 2021 bull run. Technical traders often draw horizontal trendlines on Bitcoin's price chart to determine support and resistance areas. 

Wrapping up

Although Bitcoin has become a major global asset, it remains incredibly volatile. A quick scan of Bitcoin's price history reveals plenty of parabolic moves and steep declines. A deeper dive into Bitcoin’s inherent volatility can help you make more informed decisions about buying Bitcoin. 

At Worldcoin, we understand that many people shy away from cryptos like Bitcoin and Ethereum due to their erratic price movements. However, we also feel that blockchain technology, Web3, and tokenization will play a positive role in the future global economy. That's why we're planning to give away DAI stablecoins to anyone who downloads our app. Subscribe to our YouTube channel to learn more. 

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