Bitcoin’s price has gone on a wild ride since its founding 12 years ago. Over the long-term, however, the price has been on a steady rise, compounding at roughly 100% – 200% per year. Those who bought Bitcoin early and held on to it have typically seen phenomenal returns. Of course, past performance is not indicative of future results.
Here we will look at the volatile price history of the world’s most famous cryptocurrency in terms of three waves of big price increases, some general history of the technology, where the price is now, and what the future could hold.
Bitcoin Price History
While some enjoy making Bitcoin price history comparisons to past speculative manias like Beanie Babies or tulip bulbs, speculation is only one factor in any given Bitcoin price surge. There are other factors to consider as well.
Over the years, a rather reliable pattern has emerged amidst the price history of Bitcoin. Every four years, the network undergoes a change called “the halving,” where the supply of new crypto coins rewarded to miners gets cut in half. This has happened three times so far. The first Bitcoin halving occurred in 2012, the second in 2016, and the third in 2020.
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Bitcoin reached new record highs the year following each halving event. And then, about 18-months post-halving, a bear market took hold. After a period of consolidation, the price then moved upwards again in anticipation of the next halving, beginning a new Bitcoin bull market.
Bitcoin Price in 2009: The Beginning
Bitcoin Price in 2009: $0
On October 31st, 2008, the pseudonymous person or group known as Satoshi Nakamoto published the Bitcoin white paper. This paper introduced a peer-to-peer digital cash system based on a new form of distributed ledger technology called blockchain.
Then, on January 3rd, 2009, the Bitcoin network went live with the mining of the genesis block, which allowed the first group of transactions to begin a blockchain. This block contained a text note that read: “Chancellor on Brink of Second Bailout for Banks.” This referenced an article in The London Times about the financial crisis of 2008 – 2009, when commercial banks received trillions in bailout money from central banks and governments.
For this reason and others, many suspect that Nakamoto created Bitcoin, at least in part, in response to the way the events of those years played out. Bitcoin is a decentralized cryptocurrency sent over a peer-to-peer network that allows people and organizations to bypass legacy financial institutions.
Bitcoin is also the first-of-its-kind scarce digital asset, with a fixed supply cap of 21 million. Some refer to it as “digital gold” for this reason. Like gold, Bitcoins have to be “mined” and can’t be created out of thin air like fiat currencies. Mining involves solving complex mathematical problems using advanced computers. The computers who do this work receive newly minted coins as a reward.
The Bitcoin timeline and Bitcoin price history have largely developed patterns around the halving cycles that occur every four years.
Bitcoin Price in 2011: The Surge Pt. 1
Bitcoin Price in 2011: $1 – $30
The Bitcoin price in 2009 was barely above zero. Real adoption of Bitcoin began to take place about two years later, and a major Bitcoin price surge happened for the first time.
In 2011, the Electronic Frontier Foundation (EFF) accepted BTC for donations for a few months, but quickly backtracked due to a lack of a legal framework for virtual currencies.
In February of 2011, BTC reached $1.00, achieving parity with the U.S. dollar for the first time. Months later, the price of BTC reached $10 and then quickly soared to $30 on the Mt. Gox exchange. Bitcoin had risen 100x from the year’s starting price of about $0.30.
By year’s end, the price of Bitcoin was under $5. No one can say for sure exactly why the price behaved as it did, especially back when the technology was so new. But the pattern of an 80% – 90% correction from record highs would continue to repeat itself going forward, even as much more Bitcoin liquidity would come into being.
Bitcoin Price in 2013: The Decisive Year
Bitcoin Price in 2013: $13- $1,100
In 2013, the EFF began accepting Bitcoin again, and this was the strongest year in Bitcoin price history in terms of percentage gains. The cryptocurrency saw gains of 6,600%.
Starting at $13 in the beginning of the year, the price of Bitcoin rose to almost $250 in April before correcting downward over 50%. The price consolidated for about six months until another historic rally in November and December of that year, when the price peaked out at $1,100. This bull run saw Bitcoin’s market cap exceed $1 billion for the first time ever. The world’s first Bitcoin ATM was also installed in Vancouver, allowing people to convert cash into crypto.
It would be over three years before the Bitcoin price would reach $1,000 again. The Bitcoin price in 2013 bottomed out at -85% off its record high.
Bitcoin Price in 2017: The Surge Pt. 2
Bitcoin Price in 2017: $1,100 – $20,000
The Bitcoin price in 2017 breached the $1,100 mark in January, a new record high at the time. By December, the price had soared to nearly $20,000. That’s a 20x rise in less than 12 months.
Like the 2013 price surge, the 2017 rally occurred one year after the halving. What made this time different was that for the first time ever, the general public became more aware of cryptocurrency. Mainstream news outlets began covering stories relating to Bitcoin and other cryptocurrencies. This price rise largely reflected retail investors entering the market for the first time.
Opinions on Bitcoin ranged from thinking it was a scam to believing it was the greatest thing ever. For the believers, this was an opportunity to learn how to invest in Bitcoin for the first time.
Where is the Bitcoin Price Now?
In August 2021, the price of Bitcoin was hovering around $46,000. This is down approximately 23% from the 2021 high above $60,000, which is currently also the all-time record high.
The Bitcoin hash rate, a factor thought to have some correlation to the Bitcoin price, has plummeted recently. This occurred as a result of China forcing 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 have had to go offline while their operators search for a more friendly jurisdiction in which to do business.
Many believe this reduction in mining capacity has been a key factor weighing on the Bitcoin price (which is still more than 200% higher than it was one year ago). Politicians and regulators have also come out with anti-cryptocurrency rhetoric in 2021, adding to the general environment that crypto advocates refer to as FUD (fear, uncertainty, doubt).
The Stock-to-Flow Model
Any discussion of Bitcoin price history would be incomplete without mentioning the stock-to-flow model. This is a model created by an anonymous trader known as “Plan B.”
There are many different valuation models for equities – the dividend discount model, the discounted cash flow model, and more. Stock-to-flow intends to give a valuation estimate of the price of a scarce commodity like Bitcoin.
The basic idea is that because the new supply of Bitcoins coming online remains fixed and gets cut in half every four years, the price will react accordingly within a certain range assuming demand remains constant or rises.
Recommended: How Many Bitcoins Are Left?
So far, the stock-to-flow model has proven incredibly accurate in all but a few short timeframes. At the time of writing, the Bitcoin price remains below where the model says it should be. This has only happened two other times – once during 2015 and once again during late 2018 through early 2019.
If Bitcoin continues to grow at even a fraction of the rate it has over the past 12 years, the gains for long-term crypto investors would outpace that of most other asset classes. If the stock-to-flow model remains accurate, then Bitcoin would reach the $100,000 mark in the near future. Past performance does not indicate future results, however, and it’s always possible that models like these can break down.
If you’re interested in beginning to trade crypto, a great way to start is by opening a SoFi Invest® brokerage account. With a little as $10 you can start trading not only Bitcoin but other cryptocurrencies as well, such as Litecoin, Ethereum, Dogecoin, Cardano, and Tezos.
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