the price of bitcoin has skyrocketed since its founding more than 13 years ago. Those who bought Bitcoin (BTC) early and held onto it generally made phenomenal profits, but fluctuations in the price of Bitcoin, as with all forms of crypto, also led to considerable losses.
For crypto fans and investors curious about this space, the volatile price history of the world’s oldest and most widely accepted cryptocurrency can also be viewed as a much larger saga. The history of bitcoin reflects the rise of decentralized finance (defi), the rise of blockchain technology, and countless innovations that are changing the way investors think about trading, as well as what the future of cryptocurrencies might hold.
Reading: Bitcoin in 2013
bitcoin price history
While some enjoy making historical bitcoin price comparisons to past speculative manias like beanie baby or tulip bulbs, speculation is only one factor in any given bitcoin price fluctuation.
Over the years, a fairly reliable pattern has emerged in bitcoin’s price history. Every four years, the network undergoes a change called the “halving,” where the supply of new cryptocurrencies rewarded to bitcoin miners is cut in half. this has happened three times so far. the first bitcoin halving occurred in 2012, from 50 btc to 25 btc, the second in 2016, from 25 to 12.5, and the third in 2020.
As of July 15, 2022, the current reward for mining bitcoins is 6.25 btc.
In each instance, the btc price hit new all-time highs in the year after each halving event. this was typically followed by a bitcoin bear market. After a period of consolidation, the price rose again in anticipation of the next halving, starting a new bitcoin bull market.
while the price of btc can hardly be considered predictable, it is useful to see the chapters on the price history of bitcoin and what it can mean for investors.
bitcoin price in 2009: the beginning
bitcoin price in 2009: $0
On October 31, 2008, the bitcoin white paper was published by the pseudonymous person or group known as satoshi nakamoto. this paper presented a peer-to-peer digital cash system based on a new form of distributed ledger technology called blockchain.
Then, on January 3, 2009, the bitcoin network went live with the mining of the genesis block, allowing the first set of transactions to start a chain of blocks. this block contained a text note that read: “chancellor on verge of second bailout for banks”. this was referencing a london times article on the financial crisis of 2008 – 2009, when commercial banks received trillions in bailout money from central banks and governments.
For this and other reasons, many suspect that Nakamoto created bitcoin, at least in part, in response to the way events of those years unfolded.
bitcoin breaks the mold of legacy finance
Bitcoin is a decentralized cryptocurrency that is sent over a peer-to-peer network that allows individuals and organizations to bypass legacy financial institutions.
bitcoin is also the first scarce digital asset of its kind, with a fixed supply limit of 21 million btc. some refer to it as “digital gold” for this reason. Like gold, bitcoins have to be “mined” and cannot be created by government decree like fiat currencies.
Mining involves solving complex mathematical problems using advanced computers. computers that do this job are rewarded with newly minted coins. This is generally known as a proof-of-work (POW) system, and is also a way to build consensus in a decentralized system.
Proof-of-work was the dominant way most cryptocurrencies were produced in these early years. ethereum, the next generation of crypto, started with a proof-of-work blockchain and is migrating to a proof-of-stake system.
bitcoin price in 2011: the point of increase. 1
bitcoin price in 2011: $1 – $30
the price of bitcoin in 2009 was just above zero. the actual adoption of bitcoin began to take place about two years later, and for the first time there was a large increase in the price of bitcoin.
In 2011, the Electronic Frontier Foundation (EFF) accepted BTC for donations for a few months, but quickly backed out due to the lack of a legal framework for virtual currencies.
in february 2011, btc reached $1.00, reaching parity with the us. uu. dollar for the first time. Months later, the price of BTC hit $10 and then quickly shot up to $30 on the Mt. gox exchange. bitcoin had risen 100x from the year’s starting price of around $0.30.
However, at the end of the year, the price of bitcoin was below $5. No one can say for sure why the price behaved the way it did, especially when the technology was so new. it could be that 2011 marked the launch of litecoin, a fork of the bitcoin blockchain, and other forms of crypto began to emerge as well, indicating increased competition.
In 2012, of course, bitcoin saw its first halving, from a 50 coin reward for mining btc to 25 coins. this laid the foundation for its dizzying growth. but the pattern of an 80% to 90% correction from all-time highs would continue to repeat itself going forward, even if much more bitcoin liquidity would be generated.
bitcoin price in 2013: the decisive year
bitcoin price in 2013: $13-$1,100
In 2013, the eff started accepting bitcoin again and this was the strongest year in bitcoin price history in terms of percentage gains. the cryptocurrency posted gains of 6,600%.
From $13 at the beginning of the year, the price of bitcoin rose to almost $250 in April before correcting down by more than 50%. the price consolidated for about six months until another historic rally in November and December of that year, when the price hit a high of $1,100.
This bull run caused bitcoin’s market capitalization to exceed $1 billion for the first time. The world’s first bitcoin ATM was also installed in Vancouver, allowing people to convert cash into cryptocurrencies.
It would be more than three years before the price of bitcoin would reach $1000 again. bitcoin price in 2013 bottomed out at -85% of its all-time high.
Amid this volatility there was a surge in interest in cryptocurrencies, with dogecoin being one of the most notable coins to emerge at the time. Although considered a meme coin, Dogecoin still exists.
bitcoin price in 2014 – 2016: the fallow period
While the cryptoverse quietly exploded in this period, with technological innovations that enabled the move from proof-of-work to less onerous proof-of-stake, as well as the emergence of smart contracts and the real foundations of decentralized finance: bitcoin was relatively quiet.
The price was stable in the $200-$400 range for much of this time, but began to rise with the second halving in 2016, and quickly hit the five digits within a year of the halving. half, peaking at nearly $20,000 in December 2017. let’s take a closer look.
bitcoin price in 2017: the point of increase. 2
bitcoin price in 2017: $1,100 – $20,000
Bitcoin price in 2017 broke the $1100 mark in January, a new high at the time, after bitcoin halved in July 2016. By December, the price had shot up to nearly $ 20,000. That’s a 20x increase in less than 12 months, and was predictably followed by a decline throughout 2018 and 2019. Bitcoin wouldn’t see the other side of $20,000 until late 2020.
Like the 2013 price spike, the 2017 rally came about a year after the halving. what made this time different was that for the first time, the general public became more aware of cryptocurrencies. mainstream media outlets began to cover stories related to bitcoin and other cryptocurrencies. this price increase largely reflected retail investors entering the market for the first time.
Opinions about bitcoin ranged from thinking it was a scam to believing it was the best thing ever. For believers, this was an opportunity to learn how to invest in bitcoin for the first time, but there is no doubt that the influx of retail interest in the crypto markets greatly contributed to the volatility across the board.
bitcoin price in 2020: after the 3rd halving
The crypto feeding frenzy was underway at the end of 2019, with hundreds of new coins hitting the market. As of January 3, 2020, the price of bitcoin was $7,347.49 and rose steadily as the May 2020 halving approached, shooting north of $9,100 that month, almost a 25% increase on just a few months.
but that was just the beginning of a meteoric rise and fall for btc that few will forget, and a phase of bitcoin’s history that many associate with the pandemic. With millions of people around the world confined at home from 2020 to 2021 (in some cases more), online speculation became a widespread phenomenon. One consequence of that may have been bitcoin’s biggest bull market to date.
bitcoin price in 2021-2022: epic ups and downs
In August 2021, the price of bitcoin hovered around $46,000, and in November 2021, btc reached its all-time high of over $68,500.
Towards the end of 2021, however, the bitcoin hash rate, a factor thought to have some correlation with the price of bitcoin, plummeted. this occurred in part as a result of china requiring its citizens to shut down bitcoin mining operations. the country previously housed a significant portion of the network’s mining nodes. as a result, these computers had to be taken offline. Many believe that this reduction in mining capacity was a key factor influencing the price of bitcoin.
But politicians and regulators also raised concerns about the future of cryptocurrency laws and regulations, adding to the general mood cryptocurrency pundits refer to as fud (fear, uncertainty, doubt). ), one of many cryptographic jargon terms that are now more widely used.
In any case, as of July 15, 2022, the price of btc can be viewed through a couple of different lenses. It could be noted that at around $20,000, BTC is currently around 70% below its all-time high. or one could take a long view going back to 2009 and calculate its staggering growth in just 13 years.
the stock-to-flow model
Any discussion of bitcoin’s price history would be incomplete without mentioning the stock-to-flow model and how it applies in the case of btc valuations.
As volatile as cryptocurrencies are, investors still try to anticipate price changes, similar to stock market analysts. A formula that applies to cryptocurrencies, especially bitcoin, is the stock-flow ratio. this ratio uses the current rate of production to help predict the number of years it will take to reach current supply (stock).
Since the supply of bitcoin is fixed, as is the rate of production (approximately), some cryptanalysts use the stock-to-flow model to anticipate the price of btc.
The basic idea is that because the new supply of bitcoins coming online remains fixed and halves every four years, the price will react accordingly within a certain range, assuming demand remains constant or increase.
💡 recommended: how many bitcoins are left?
While bitcoin’s price has often defied expectations, it’s helpful to remember that the story of the world’s largest cryptocurrency is just beginning. Thanks to its limited coin supply, BTC remains a relatively rare and coveted currency, so it’s likely to hold value over time.
If bitcoin continues to grow at even a fraction of the rate it has been for the last 13 years, the returns for long-term crypto investors would exceed those of most other asset classes. If the stock-to-flow model remains accurate, then bitcoin would hit the $100,000 mark in the near future. however, past performance is no indication of future results and it is always possible for models like these to break.
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photo credit: istock/simarik
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