Bitcoin history

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From Bitcoin’s inception until today the asset has generated 50.000.000% gains dwarfing all other assets on the planet. Even though any investor who has owned the asset more than 3 years has a positive return, Bitcoin remains a controversial asset. The Bitcoin price always gets attention after big moves both up and down. When the price drops significantly the bears and Bitcoin doomers step in and declare Bitcoin “dead” and when the price grows parabolically the bulls and so-called “moon boys” make their case that the Bitcoin price will be in the millions of dollars per Bitcoin in the future. Bitcoin price predictions keep coming from analysts, Bitcoin evangelists, youtubers and others on a daily basis which makes it difficult for any layman to decipher the market. That’s why in this article we will go all the way back to the start, so you can make up your own opinion. 

Bitcoin was invented by the mysterious Satoshi Nakamoto, who registered the domain Bitcoin.org on August 18, 2008. On January 3, 2009, Satoshi Nakamoto completed the first on-chain peer-to-peer transaction. He sent 50 Bitcoin of which 10 were sent to Hal Finney and the remaining 40 to Satoshi himself. Until October 2009, Bitcoin was exchanged between cryptography enthusiasts, who sent Bitcoin to each other on a hobby level and there was no set price. On October 5, 2009, Bitcoin was priced at 1309.03 Bitcoin for $1, equivalent to $0.00076 per Bitcoin on New Liberty Standard.

From 2009 until today, Bitcoin has gone through a massive evolution. The Bitcoin price has been characterized by large fluctuations with meteoric rises and massive falls – sometimes in the form of so-called flash crashes. During its evolution Bitcoin has so far undergone 3 parabolic growth cycles, where the price has risen sharply in a period followed by large declines. Parabolic growth occurs when an asset moves in a strong bullish channel while the market sentiment becomes stronger and the growth as a result gradually steeper. The reason for the parabolic growth is an increasingly irrational buying behaviour and massive speculation as the price rises.

Silk Road as a catalyst for the 2011 bubble
Bitcoins History - Source: BTCUSD on TradingView.com

On March 17, 2010, Bitcoin was registered on the now-defunct Bitcoinmarket.com at a price of $0.003 per Bitcoin. During July 2010, the price reached $0.08 per Bitcoin – an increase of over 2600% in just over 3 months. In February 2011, the price of a Bitcoin reached $1 for the first time and on July 8, 2011, the price peaked at $31. The increase is attributed by many to being caused by the black market Silk Road’s growing popularity and increased demand for Bitcoin as a result. In December 2011, however, the bubble burst, and Bitcoin fell more than 93% to $2. The main reason for this crash was that the then leading cryptocurrency exchange Mt. Gox was hacked, resulting in panic and fire sales in the market.

 Cyprus crisis triggers Bitcoin’s first big bull run

After the first bubble burst and the drastic price drop to $2 had occurred, the price started to rise slowly again. In the period from July 3, 2012, to August 17, 2012, Bitcoin rose from $6.4 to $15.4 and immediately fell to $7.5. The price first surpassed $15 again in early 2013. The spark that ignited this bull run was the financial crisis in Cyprus. Cyprus, as a result of the recession triggered by the US subprime mortgage crisis, had to spend a rescue package of 16 billion Euro. The precondition for receiving the aid was that the Cypriot central bank should tax bank deposits of more than 100,000 Euros and thereby recover a total of 6 billion Euro.

Up to a third of all bank deposits came from outside the EU, especially from wealthy Russians. The crisis sparked speculation and attempts to protect fortunes through investing in Bitcoin. The notion that there is no alternative in the financial market that is as secure as having the money in a bank account was strongly challenged and confidence disappeared. Suddenly, Bitcoin appeared more relevant than ever since it is not controlled by any state or bank, which is why it cannot be confiscated either. Immediately after the announcement of the Cypriot aid package, the price of Bitcoin rose from $48 to a preliminary peak on April 10, 2013 of $266. In November of the same year, the price for the first time went above $1000 per Bitcoin and closed the year on 31 December 2013 at $806. The increase for the year totalled at $792.5 or 5970%.

Mt. Gox bankruptcy and Bitcoins abysmal decline
Cyprus bailout - Source: BTCUSD on TradingView.com

2014 started positively for Bitcoin, but the closing price of $1,015 on January 5, 2014 also became the peak for Bitcoin that year. On February 7, the leading Bitcoin exchange Mt. Gox halted all Bitcoin withdrawals. Fear started to spread as a result of customers’ problems with getting their receivables paid out. The Bitcoin price opened at $827 but had lost $132 when the day was over and closed at $695. On February 28, Mt. Gox filed for bankruptcy protection from creditors following claims that hackers had stolen 744.000 Bitcoins from the exchange. In the period that followed, the price continued to fall reaching a low of $363

Mt. Gox bankruptcy - Source: BTCUSD on TradingView.com
Mt. Gox bankruptcy - Source: BTCUSD on TradingView.com

The stagnation phase

Following the major boom of 2013 and the fall of Mt. Gox a year later, Bitcoin traders had nowhere to go and Bitcoin entered a short bearish season. 2015 began with Coinbase raising $75 million in an investment round that surpassed any previous funding round for a Bitcoin-related firm.

In the same month, investors faced another exchange crisis as Bitstamp announced that it would stop all trading and turn the exchange offline. As the main reason, the team at Bitstamp reported the investigation of a hack that resulted in 19K BTC being stolen from the exchange. At the time, the amount was valued at $5 million.

By January 9, Bitstamp resumed trading and revealed that it implemented several security measures while claiming that all customers would retain their crypto funds. However, the exchange’s statements were not reassuring enough as Bitcoin reached a new low less than a week later. On January 14, 2015 Bitcoin bottomed at the price of $152. The leading cryptocurrency continued to range between $200 and $310 for most of the year before igniting a new rally in September.

By November, Bitcoin already reached $500 only to fall almost 50% in value during the month’s second week. But soon enough Bitcoin began a rally that would lead to the great bubble of 2017, retracing several times but staying bullish.

As seen in the graph below, following the events of Mt. Gox hack, the price of Bitcoin remained relatively stable from 2014 till 2017 with no significant up or down fluctuations. The price stayed below $1,000 for the major portion. Although attention to Bitcoin’s price faded away, the cryptocurrency world didn’t stop developing. July 30, 2015, marked the entry of the 2nd biggest player in the cryptocurrency world in terms of market capitalization as of now, Ethereum.

The stagnation phase - Source: BTCUSD on TradingView.com
Mt. Gox bankruptcy - Source: BTCUSD on TradingView.com

2016 Mini bubble

At the very start of 2016 Bitcoin reached a bottom which would mark a yearly low. Falling to $367 in the middle of January, the digital asset slowly grinded higher for the next several months. Despite having the Japanese government legally recognizing Bitcoin as a form of tender in March, investors did not go on a buying spree.

Nevertheless, bulls still resumed the rally for that year. By the end of May, investors started to massively buy Bitcoin resulting in a drastic price surge. By June 17, the asset reached a value of $767. But just as with the previous price explosion, the cryptocurrency market retraced and continued to trade sideways until August.

In August the price took a hard hit as hackers attacked the leading crypto derivatives exchange Bitfinex and stole 120,000 BTC. The total sum was valued at $60 million making it one of the largest hacks in the history of Bitcoin. The price of course severely declined over a short time period and plunged to a low of $465 on August 2, 2016.

The panic caused by the hack did not last long as Bitcoin only went on to resume what it had previously started. 

2017 – Bull run

2017 was a great year for Bitcoin with an almost twentyfold price increase. January 2, 2017, saw Bitcoin at $1,011. The start of the year also saw some regulatory tightening around the digital asset as the People’s Bank of China announced to keep a strict oversight over its leading Bitcoin exchanges. Although this news was expected to deliver a hard blow to the asset, Bitcoin maintained its price. The imposition of new trading fees on 3 big exchanges; BTCC, OKCoin, and Huobi saw the trading volumes drop.

2017 Bitcoin bull run - Source: BTCUSD on TradingView.com
2017 Bitcoin bull run - Source: BTCUSD on TradingView.com

ETF proposals flood the SEC

March 2017 saw the Bitcoin exchange-traded fund proposal getting shot down by the U.S. Securities and Exchange Commission. The proposal was put up by the famous Winklevoss twins back in 2013. The lack of approval from the SEC made the market react very badly. On the day of this event, the market dropped nearly 30%. Despite the fall, recovery took place and the asset surpassed $1,000 yet again.

Despite the negative outlook shown by the SEC in regard to the approval of a crypto-related ETF, several firms started filing in for the approval of a Bitcoin ETF. The focus of all these proposals was very-tightly linked to cryptocurrency futures.

The summer of ICOs

From May till September, it was the summer of breaking all-time highs and increased initial coin offering (ICO) activity. May 1 saw Bitcoin set its new record. The end of May saw Bitcoin cross the $2,000 landmark for the very first time. Just weeks later, $3,000 was up. The train of Bitcoin had just caught super speed. But it was a bumpy track. There were steep inclines accompanied by sharp declines.

Top 2017 ICOs - Source: Autonomous NEXT analysis
Top 2017 ICOs - Source: Autonomous NEXT analysis

Famous analysts step in

As the Bitcoin price became the center attention in the market, prominent Wall Street analysts started stepping in to predict price movements. Notably, Sheba Jafari from Goldman Sachs predicted a rush past the $4,000 mark. The subsequent weeks and months saw more and more prominent analysts stepping in.

Happy-sad September

Within the first week of September 2017, the price shot past the $5,000 for the first time. But only two days later, the price started dropping in hundreds. Slowly, a reversal of all the summer gains took and place and September 14 saw Bitcoin fall below $3,400. The next day it retraced to under $3,000. The happy start met a sad end.

The October recovery

The dread that September brought over to the Bitcoin world ended in mid-October as the digital asset slowly recovered past the $5,000 mark. The month also saw the closure of the 3 big Chinese exchanges as a worldwide crackdown took place on ICOs. Despite all the negative news and the crypto world being perceived as very unsafe, the bullish sentiment with Bitcoin stayed and the launchpad was set for November and December. October and November saw Bitcoin speed past the $6,000 and $7,000 mark.

December blow-off top

Riding on a steep wave of parabola, Bitcoin hit a new all-time high of $19,783 on 17th December. These were the times where people made, and lost fortunes depending on their entry and exit in the market. The new top at $19,783 was quickly followed by a severe drop back to $13,000.

2018 – bear market returns

Apart from a rebound back to $17,000 at the start of January 2018, the price spiralled downwards. The journey from there on for the rest of the year is largely downwards with a few bumps here and there.

On February 5, Bitcoin fell 50% in two weeks and hit $7,000. Investors gradually sold their cryptocurrencies throughout the year, resulting in constant selling pressure.

None of the ETF proposals to SEC saw the light of the day and the approval were delayed again and again. 

The year ended with a dismal stay on the $3,946 on December 29, 2018.

2018 bear market - Source: BTCUSD on TradingView.com
2018 bear market - Source: BTCUSD on TradingView.com

2019 – the bottom is in

The day after April Fool’s day, bulls came back to show some strength for the first time since the 2918 bull run. As a result, Bitcoin increased from $4,000 to $5,080 in a single day.

Bullish demand went on until June 2019, a year which many believed to be the start of a new bull run. However, Bitcoin failed to surpass heavy resistance and fell instantly after touching $13,880 on 26 June. In July bulls attempted another push for higher highs but failed. Bitcoin fell to $9,300 in August and rose to $12,300 after only two weeks.

In December, Bitcoin finally found its bottom at $3,100. At the time, many investors were convinced the asset would continue to decline.

2020 – The best year since 2017

Even with the corona crash 2020 has proved to be the best year for Bitcoin since 2017. As investors faced the rise of the pandemic fear and anxiety grew. As a result, the Bitcoin price and markets in general crashed on March 12 with Bitcoin hitting a year bottom of $3,800 on Bitstamp the day after. Other exchanges have even reported prices as low as $3,400.

Quick recovery

The crash left investors confused as they faced the rise of a pandemic. With high uncertainty and fear that the crash may repeat in 2020, many were very fearful for the future of Bitcoin and the financial markets in general. However, the asset like the stock market made a v-shaped recovery and reached its pre-crash price level by May. In June Bitcoin finally set a higher high ending the bear market since the beginning of 2018.

V-shaped recovery - Source: BTCUSD on TradingView.com
V-shaped recovery - Source: BTCUSD on TradingView.com

Positive fundamentals

In October leading online payment processor PayPal announced that it would enable support for cryptocurrencies. Initially for U.S. citizens only, the company promised to expand the service to the rest of the world in 2021.

Several news reports of corporate investments, mainly by Square, MicroStrategy, and Grayscale, have further ignited the 2020 bull run. On November 5, bulls created a price surge that led to a price increase of close to $1500 in a single day.

After continued demand throughout November, Bitcoin set a new all-time high on November 30, reaching $19,857 topping the previous high of $19,783 from December 18. 2017.

Kicking of a new bull cycle

After the new all-time high Bitcoin corrected down to $17,564 over a period of 11 days. The asset grew parabolically throughout December, setting higher highs almost every day. In January Bitcoin reached its current price peak at $42,000 on January 8, 2021

New bull cycle - Source: BTCUSD on TradingView.com
New bull cycle - Source: BTCUSD on TradingView.com

Bitcoin is currently in a parabolic growth cycle setting new highs very often. The Bitcoin price has now surpassed the forty-thousand-dollar mark which is the highest of all the times. So far Bitcoin has been able reach higher prices in every bull cycle. Bitcoin’s highest price to date is $42,000 set on January 8, 2021.

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