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Stablecoins are digital currencies that are designed with the goal of maintaining a fixed, or stable, value. They are structured to function much like fiat currencies, but exist instead on the blockchain. This brings with it several benefits in terms of accessibility, usability, and speed.

There are multiple types of stablecoins, each defined by the mechanism used to maintain the one-to-one value peg to their respective fiat currencies. With broader institutional adoption of stablecoins only just beginning, however, there are still risks to consider with these relatively new digital currencies.

What Are Stablecoins?

Stablecoins are digital coins that maintain a stable value. Most stablecoins are pegged to popular fiat currencies like the U.S. Dollar, Chinese Yuan, or the Euro. Some are pegged to commodities, like gold, too.

How Stablecoins Differ From Other Cryptocurrencies

In theory, a stablecoin could have its value linked to just about anything. However, stablecoins pegged to a fiat currency are the most common. As such, when someone uses the term “stablecoin,” they are most likely referring to fiat currency coins.

In terms of value, the most stable cryptocurrency will, by definition, be a stablecoin. Some of these coins see their values fluctuate by small amounts, but they tend to correct back to their normal value in short order.

If there is any volatility in the value of a specific stablecoin, it’s likely much less than that seen in other types of cryptocurrencies.

The Purpose of Stablecoins in the Crypto Ecosystem

Stablecoins have a variety of potential use cases, but the main idea behind stablecoins is to create a cryptocurrency that is not subject to the volatility experienced by other cryptocurrencies, like Bitcoin and the many hundreds of altcoins. That, in some shape or form, could provide a sense of stability to the crypto ecosystem.

Key Benefits and Drawbacks

Stablecoin transactions tend to be faster, more efficient, and cheaper than conventional payment or money transfer systems. They may allow financial institutions that leverage them to offer lower fees in certain instances as well.

More broadly, stablecoins’ low cost and accessibility to those with internet access or a smartphone may allow unbanked or underbanked groups broader access to financial services, assuming they reside in an area where these cryptocurrencies are permitted. These coins also benefit from the security of blockchain technology.

Stablecoins could also be used as a store of value, as they are often pegged to a currency or commodity.

Conversely, as for drawbacks, stablecoins also don’t have the same consumer protections in place that traditional banks do. Users will need to hold their stablecoin balance via any number of crypto storage methods and the cryptocurrency wallet of their choice.

There could also be a potential lack of transparency regarding their reserves of stablecoins. Auditors must verify that reserve requirements are met, and it’s important to know that these third-party groups are reputable, as well. In other words, it can sometimes be difficult to know whether the company behind the coin actually holds one dollar for each dollar-backed stablecoin.

Why Stablecoins Matter in the Digital Currency Landscape

A stablecoins become more common in the crypto and financial spaces, it’s important to know why, exactly, they matter.

Addressing Volatility in Crypto Markets

As noted, they can play a stabilizing role in the broader markets. They’re stable, as much as a cryptocurrency likely could be. That doesn’t mean that they’re immune from volatility, of course, but stablecoins are designed to be, well, stable. As such, they can provide a sort of ballast in terms of volatility to the larger crypto space.

Use Cases and Real-World Applications

One of the primary use cases and applications of stablecoins, as of 2025, is that they can help enable fast and cheap global remittances, or cross-border transactions.

Traditional bank transfers typically take anywhere from three-to-five business days and can cost anywhere from a few dollars to dozens of dollars. International transfers tend to be the most expensive.

Stablecoin transactions can be confirmed within minutes, or less, and at very little cost. Two people with stablecoin wallets can transact with each other from anywhere in the world at any time without the need for a third-party intermediary.

Additionally, stablecoins could be used in other areas, such as running payroll for international work, or even as something that could dampen volatility in crypto markets, as they tend to maintain a fairly level valuation.

Market Growth and Adoption Trends

Looking forward, it’s likely that stablecoins will continue to grow in terms of usage and adoption in the broader financial space. Within 18 months, total issued stablecoin value more than doubled to $250 billion from $120 billion between early 2024 and mid-2025^[1], and also, more and more companies are looking to adopt or launch stablecoins.

As of September 2-25, 13% of financial institutions around the world use them, and 54% of those that do not plan to adopt them within a year.^[2]

The 4 Types of Stablecoins

Generally, there are four types of stablecoins: fiat-backed, commodity-backed, crypto-collateralized, and algorithmic stablecoins.

1. Fiat-Backed Stablecoins

Some of the most widely-used stablecoins today use a centralized model and back new token issues with fiat currency at a one-to-one ratio. U.S. Dollar Coin (USDC) and Tether (USDT) are examples of this type of coin.

2. Commodity-backed Stablecoins

Some stablecoins are backed by other assets, like gold. The overall functions remain the same, but the value is tied to the current price of gold, with physical gold used as collateral.

3. Crypto-collateralized Stablecoins

Some other stablecoins that use a decentralized model, like DAI, have grown in popularity in the crypto community. Rather than maintaining their stable value through fiat reserves, users can lock up cryptocurrency as collateral for borrowing DAI on the Maker DAO platform.

There are also a growing number of decentralized lending platforms that allow users to deposit DAI or other stablecoins and earn interest. Network consensus, rather than a centralized team, governs DAI (similar to how Bitcoin works), which maintains a value equal to one U.S. dollar.

4. Algorithmic Stablecoins

Decentralized algorithmic coins are a newer technology and differ from the other types of stablecoins in that they don’t involve any type of collateral backing. Instead, they rely on smart contracts to maintain their price.

Comparing Stablecoins Strengths and Weaknesses

The different types of stablecoins are designed for different reasons, and therefore, can serve different purposes. In other words, they may each have strengths and weaknesses, depending on what a user wants to do with them.

So, depending on what a user wants or hopes for out of a stablecoin, those strengths or weaknesses may revolve around a specific coin’s relative stability, its risks related to regulation and centralization, its liquidity, and perhaps even its specific complexity.

Factors Influencing Stablecoins Price Behavior

Getting more granular, there are a lot of things to understand as to how stablecoins’ value is maintained.

How Stablecoins Maintain Price Stability

Stablecoins use a variety of means to maintain their price stability, and that includes various forms of collateralization, as discussed, which means they’re “pegged” to or “backed” by various forms of fiat currency, crypto, or commodities. Smart contracts, housed on blockchain networks, automatically keep stablecoin supply in check by executing trades or burning coins, which evens out with dynamic demand, and keeps values relatively stable.

Algorithmic Price Controls and Protocols

For stablecoins that maintain their value via algorithmic price control mechanisms, the process is similar. An algorithm creates or burns (destroys) coins to maintain a certain level of total coins that reaches a level of equilibrium with supply and demand. That algorithm, accordingly, maintains the stablecoins’ value. Again: Similar to smart contracts, but slightly different.

The Role of Arbitrage and Redemption in Stabilization

Crypto arbitrage, or the act of buying and selling the same stablecoins to try to profit from price differences, along with redemption, or trading in a stablecoin for its equal value in fiat currency, may help level price differences across coins. In effect, these two market factors or mechanisms, in conjunction with algorithmic or smart contract-powered price controls, can help keep a stablecoin’s value steady.

Importance of Transparency and Auditing

Each stablecoin is different, and there can be varying levels of transparency, and auditing associated with each stablecoin. Those differences can make a difference in terms of demand for a specific coin. If a stablecoin A is less transparent or somewhat riskier than stablecoin B, for instance, which would you prefer to use?

Reserve Quality, Transparency, and Auditing

A stablecoin’s reserve can also play a role in influencing its value and behavior. We’ve discussed how some stablecoins are backed by commodities or fiat. If a stablecoin is backed by a low-quality or low-value commodity, such as dirt, while another is backed by gold, that can create some divisions.

Further, there is likely to be some regard for how those reserves are tracked or audited, and how a stablecoin’s value matches up with its underlying reserve. All of that can come into play for stablecoin users.

Regulatory Environment and Evolving Legal Frameworks

The rules are changing around stablecoins, and each country will have its own way of dealing with them. That can and will also have an effect on supply, demand, and values.

Market Confidence, Track Record, and Reputation

There’s been a long-standing issue in the crypto space surrounding scams and rug-pulls, and that can give some users pause when deciding to utilize one coin versus the next. Accordingly, market confidence, track record, and reputation related to a specific coin are important factors.

Liquidity, Adoption, and Technical Reliability

Further, how widely used and reliable a stablecoin is perceived to be can also be important. Stablecoin holders will want to know that they can get their money back — that is, liquidate their holdings if and when they choose to do so — without much effort or friction.

Common Risks and Failure Scenarios

It’s possible that stablecoins could lose their value due to depegging, which is when the price of a stablecoin moves more substantially away from its pegged value. This could result from loss of confidence in the stablecoin or its reserves, panic selling, operational failures, and other factors. There are a number of things that could go wrong, and with the crypto space still evolving and still less regulated than the financial space, users should know that risks exist.

Stablecoins and Their Relationship With Traditional Finance

We’re still in the early stages of stablecoins’ integration into the broader, traditional financial space, and it’s evolving right before our eyes. But there are some use cases to be aware of, such as using DeFi blockchain technology to make loans, and more.

Stablecoins in Financial Trading and DeFi

Stablecoins are becoming a necessary component of the decentralized finance (DeFi) space. Holders can make transactions like peer-to-peer lending — where people make direct loans to each other via blockchain — with stablecoins.

Some users might prefer this option to other cryptocurrencies, which could hurt their rate of return if the price goes down. A stablecoin’s steady value may also add an element of confidence to financial arrangements.

Integration WIth Existing Financial Systems

Stablecoins and crypto are again being increasingly adopted by traditional and long-standing financial institutions. As such, they’ll likely become further ingrained and integrated into the broader financial space.

Centralization vs. Decentralization Considerations

One thing that attracts many users to the crypto space is its decentralized nature, which may allow them to access financial services more easily — from their smartphone or computer — and with fewer and lower fees.

Stablecoins could become more centralized as they’re adopted by bigger players and further integrated into the financial industry. However, this could also allow these groups to offer lower fees in some cases and increase accessibility since fewer intermediaries, if any, may be needed for transactions.

Regulatory Oversight and Compliance Challenges

There have been new rules and regulations floated to help smooth the path for stablecoins’ wider adoption in the financial space. The GENIUS Act, specifically, tasks the Treasury Department to encourage stablecoin innovation and adoption, and lays out which existing laws and regulations that they may be subject to. This is all still being worked out, but in the U.S., it is a change in how the federal government has, in the past, viewed most cryptocurrencies.^[3]

Practical Applications of Stablecoins for Businesses and Individuals

There are numerous potential applications for stablecoins.

•   Cross-border payments and remittances: Money, in its numerous forms, is designed to store and transfer value. Stablecoins can do the same, and perhaps with less associated costs. It can be expensive to make international payments or transfers, but it’s possible stablecoins could provide an alternative.

•   Treasury protection in high-inflation economies: It’s possible that stablecoins could provide some protections from inflation since they’re often backed by treasuries, particularly in places where inflation is a very serious problem. While we’ve had issues in the U.S. related to inflation in recent years, some countries have much higher rates of inflation, and stablecoins could provide ways to alleviate it.

•   Payroll solutions for remote teams and contractors: As discussed, stablecoins may prove useful in facilitating international payments. That could be a boon for business owners operating remote teams, or working with international freelancers or contractors.

•   Ecommerce and settlement: Stablecoins could prove a viable alternative to simple fiat currencies, like U.S. dollars, in certain cases to facilitate other types of purchases.

•   Addressing volatility in crypto markets: As mentioned, stablecoins may serve as a ballast in the crypto markets, lowering overall volatility.

•   Promoting financial inclusion for the unbanked and underbanked: There are a significant number of “unbanked” individuals in the U.S., or those who either choose not to use traditional banking services, or otherwise can’t access them. Stablecoins could bring those people into the fold, or prove a way for them to access the financial space.

The Future of Stablecoins

The future of stablecoins is still up in the air, but they do have momentum.

Emerging Trends and Innovations

Stablecoins are trending, as more and more financial institutions are starting to use them to facilitate transactions, and some will likely issue their own. As that happens, innovation will occur, as well, as users find new use cases or other ways to take advantage of stablecoins going forward.

Potential Impact on Global Finance

We don’t know what’s going to happen, but stablecoins could potentially have a significant impact on global finance. If they do prove successful at offering a quicker and more accessible payment system that can be used worldwide, the implications are wide-ranging.

The Takeaway

Stablecoins are cryptocurrencies that are designed to keep their value stable in relation to another asset — most commonly, an existing fiat currency, such as the U.S. dollar. Issuing these coins on a blockchain may help remove certain barriers to entry associated with traditional, legacy financial systems at large. It also has the potential to provide greater access to financial services to those who may not otherwise have the opportunity to participate in the world of finance.

Soon, SoFi members will be able to buy, sell, and hold cryptocurrencies, such as Bitcoin, Ethereum, and more, and manage them all seamlessly alongside their other finances. This, however, is just the first of an expanding list of crypto services SoFi aims to provide, giving members more control and more ways to manage their money.

FAQ

What is the most stable cryptocurrency?

Theoretically, any stablecoin should be stable; most of them see their values fluctuate very little on a daily basis. The decentralized and algorithmic stablecoins have experienced somewhat more volatility than the centralized coins, historically.

What are some examples of stablecoins?

There are numerous stablecoins on the market, including DAI, Tether, Binance USD, USD Coins, and Paxos.

Can stablecoins offer protection from inflation?

It’s possible that stablecoins could provide some protections from inflation since they’re often backed by treasuries, particularly in places where inflation is a very serious problem.

About the author

Brian Nibley

Brian Nibley is a freelance writer, author, and investor who has been covering the cryptocurrency space since 2017. His work has appeared in publications such as MSN Money, Blockworks, Business Insider, Cointelegraph, Finance Magnates, and Newsweek. Read full bio.

Photo credit: iStock/tomap49

SOCRYP-Q325-107

As the most widely recognized and adopted cryptocurrency, Bitcoin’s price can in many ways serve as a barometer for the health of the entire crypto market. With the highest market cap of all cryptocurrencies by a wide margin, it has the potential to lift the prices of other cryptocurrencies in the wake of its own price increases, and likewise pull broader market prices down when its own numbers fall.

The price of Bitcoin (BTC) has been on a wild ride since it launched over 14 years ago, on January 3, 2009. Those who bought Bitcoin early have seen its price rise significantly, surpassing $124,000 for a brief moment in mid-2025, following a steep decline in 2023. However, the fluctuations in Bitcoin’s price — as with all forms of crypto — have also led to considerable losses.^[1]

A review of Bitcoin price history shows plenty of ups and some significant downs, but despite the risks, crypto fans continue to seek it out. Like other cryptocurrencies, Bitcoin’s price is largely driven by sentiment, and those who buy in must be comfortable with the elevated risk that buying and selling crypto entails.

Bitcoin Price History Over the Years

A glance at the Bitcoin historical price chart illustrates the cryptocurrency’s steep rise since its inception. It’s equally clear that the path to Bitcoin’s current price has not always been a smooth one, and that it may continue to see fluctuations over time.

While some enjoy comparing Bitcoin’s price history to past speculative manias like Beanie Babies circa 1995 (or the infamous tulip bubble circa 1636), speculation is only one factor in any given Bitcoin price fluctuation.

Over the years, one pattern can be seen in Bitcoin’s prices. Every four years, the network undergoes a change called “the halving,” where the supply of new BTC rewarded to Bitcoin miners gets cut in half. This has happened four times so far:

•   2012: 50 BTC to 25 BTC

•   2016: 25 BTC to 12.5 BTC

•   2020: 12.5 BTC to 6.25 BTC

•   2024: 6.25 BTC to 3.125 BTC2

The next Bitcoin halving is set to occur in March or April of 2028.

In each instance, the price of BTC reached new record highs in the year or so following each halving event. This was typically followed by a Bitcoin bear market. After a period of consolidation, the price then tended to move upwards again in advance of the next halving, though there’s no guarantee that this may occur in the future.

While the price of BTC can hardly be considered predictable, it’s useful to view the chapters in the Bitcoin price history and what it may mean for potential buyers, sellers, and holders.

Bitcoin Price History by Year (2014-2025)

Source: Yahoo Finance, CoinDesk

Bitcoin Price 2009-2012: $0 to $13.50

Early Bitcoin price history shows relatively modest growth. As buzz around Bitcoin grew, more crypto-curious individuals began to pay attention to this seemingly novel idea and its potential as a serious vehicle for growth.

2009: $0

On October 31, 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 3, 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. This event helped mark Bitcoin’s original price at $0.

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.

2010: $0.00099 to $0.30

Bitcoin’s price increased nominally for most of 2010, never surpassing the $1 mark. The first recorded price at which Bitcoin was exchanged was equivalent to roughly one-tenth of a cent, and the year closed with a price near $0.30. The first notable price jump would not be far off, however.

2011 – 2012: $1 to $13.50

Real adoption of Bitcoin began to take place about two years after it was first introduced, 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 for the first time, achieving parity with the U.S. dollar. 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, though, 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. 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 — signaling greater competition.

In 2012, of course, Bitcoin saw its first halving, from a 50-coin reward for mining BTC to 25 coins. This set the stage for its precipitous growth. 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.

Recommended: Is Crypto Mining Still Worth It in 2025?

2013 – 2016: $13 to $1,000

The period between 2013 and 2016 would mark the beginning of Bitcoin’s ascension as a cryptocurrency to be taken seriously. Pricing increased dramatically during this time, as more people began to take notice of Bitcoin’s potential.

2013: $13 to $1,193

In 2013, the EFF began accepting Bitcoin again, and this was the strongest year in Bitcoin price history in terms of percentage gains. Starting at $13 in the beginning of the year, the price of Bitcoin rose to almost $250 in April before correcting downward by over 50%. The price consolidated for about six months until another historic rally in November and December of that year, when the price hit $1,193.

This increase 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.

While the price spiked above $1,000 again briefly in January 2014, it would be nearly three years before the Bitcoin price would reach four digits again.

Amidst all this volatility was a surge in crypto interest, with Dogecoin being one of the more notable coins to emerge at that time. Though considered a meme coin, Dogecoin still exists.

2014 – 2015: $760 to $430

While the cryptoverse quietly exploded in this time period, with technological innovations that permitted a move away from proof-of-work to the less resource-intensive proof-of-stake, as well as the emergence of smart contracts, and the real foundations of decentralized finance — Bitcoin was relatively quiet.

While 2014 opened at about $760, the price overall held steady in the $200 to $500 range for much of this time, briefly dipping below $200 in January and August of 2015. Bitcoin closed out 2015 at $430, marking a period of overall price stability. The official B symbol that has come to be associated with Bitcoin was adopted in November of that year.

2016: $430 to $960

In 2016, Bitcoin halved for a second time, prompting a notable jump in prices by year’s end. January ended the month with a closing price of $368, but by December, Bitcoin’s price had almost reached $1,000. A slight dip in pricing occurred around August, but for the most part, the cryptocurrency saw a steady and consistent rise in price.

2017 – 2019: $960 to $7,200

Between 2017 and 2019, Bitcoin would dazzle crypto watchers with big price leaps, but the outlook was not entirely rosy during this period. In 2018, a major crash would deliver a blow to BTC’s price and raise questions about the stability of cryptocurrency markets as a whole.

2017: $960 to $20,000

The Bitcoin price in 2017 breached the $1,100 mark in January, a new record at the time — following the Bitcoin halving in July of 2016. By December, the price had soared to nearly $20,000. That’s a 20x rise in less than 12 months, and it was followed predictably by a decline through 2018 and 2019. Bitcoin wouldn’t see the other side of $20,000 until late 2020.

Like the 2013 price surge, the 2017 rally occurred about 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 buyers 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 for many to purchase Bitcoin for the first time, but there’s little doubt that the influx of retail interest in the crypto markets contributed heavily to volatility across the board.

2018: $14,000 to $3,700

The year 2018 was an unpredictable one for Bitcoin pricing. Following a relatively strong start in January, with prices closing above $10,000, the cryptocurrency ended the year at $3,742. This period stands out as one of the most significant cryptocurrency crashes, affecting not only Bitcoin but more than 90 other digital currencies that had arisen.

Bitcoin’s decline during this period was attributed to numerous factors, including the launch of several new crypto offerings that quickly fizzled, which triggered fear in the markets.

Apart from these concerns were rumors that South Korea was contemplating banning cryptocurrency, and the hacking of Coincheck, Japan’s largest OTC cryptocurrency exchange network. Combined, these factors created a perfect storm for price drops and criticism of Bitcoin from none other than Warren Buffett, who characterized it as “rat poison squared”.

2019: $3,700 to $7,200

Bitcoin began to see some recovery in 2019, though it was initially slow going. For most of the first quarter, Bitcoin’s price hovered between $3,500 and $5,000, before a surge in June of that year that tipped its price above $13,000.

June saw the cryptocurrency’s price rise above $10,000 again, and Bitcoin held steady throughout July. By August, the tide had begun to turn, and the remainder of the year saw a gradual slide in pricing. In December 2019, Bitcoin closed at $7,193, still well above its January price point but far from the highs reached in 2017.

The next big test of Bitcoin’s strength in the crypto markets would come in 2020, with the arrival of the COVID-19 pandemic.

2020 – 2025: $7,200 to $124,000

The period from 2020 to 2025 would see Bitcoin prices reach their highest levels yet — and one of the worst crashes in the cryptocurrency’s history. Against mounting pressure, Bitcoin would continue to attract new buyers hoping to get exposure to the crypto market.

2020: $7,200 to $29,000

The crypto feeding frenzy was well underway by the end of 2019, with hundreds of new coins on the market. By January 3, 2020, Bitcoin’s price was $7,347 and rising steadily for the most part. As the halving in May of 2020 approached, Bitcoin’s price shot north of $9,100, nearly a 25% increase in just a few months.

But that was just the start of a meteoric rise — and fall — for BTC that few will forget, and a phase of Bitcoin’s story that many tie to the pandemic. With millions of people worldwide confined at home from 2020 through 2021 (in some cases longer), online speculation became a widespread phenomenon. One offshoot of that may have been the biggest Bitcoin bull market to date.

2021: $29,000 to $69,000

In August 2021, the price of Bitcoin was hovering around $46,000, and by November 2021 BTC hit its all-time best over $68,500.

Toward the end of 2021, however, the Bitcoin hash rate, a factor thought to have some correlation to the Bitcoin price, plummeted to around $47,000 — a loss of close to 30%.

The price drop occurred partly 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 go offline. Many believe this reduction in mining capacity was a key factor weighing on the Bitcoin price.

In addition, politicians and regulators raised concerns about the future of crypto laws and regulations, adding to the general mood that crypto mavens refer to as FUD (fear, uncertainty, doubt) — one of many crypto slang terms now in wider use.

But as 2021 shifted into 2022, the specter of inflation — in addition to the global energy crisis and geopolitical turmoil thanks to Russia’s war on Ukraine — put a drag on the price of BTC and just about every other major crypto.

2022: $47,000 to $16,5000

From January 2022 through May, Bitcoin’s price continued to sag as the Crypto Winter officially took hold. By May, BTC dipped under $30,000 for the first time since July of 2021. June would see Bitcoin’s price move even lower, dropping to $17,708 at its lowest point that month.

What Is a Crypto Winter?

Unlike a bear market, a crypto winter doesn’t have specific parameters or criteria. But, similar to a bear market, it does mark a period of steady and sometimes precipitous losses that pervade the crypto markets as a whole.

Crypto Struggles in the Face of Crises

This downward trend proved to be the case as crypto prices overall declined through Q2 — partly affected by the collapse of stablecoins like TerraUSD and Luna. In June, Bitcoin fell below $20,000.

Crypto prices struggled through Q3 of 2022, and took another hit in November 2022, thanks to the sudden failure of crypto exchange FTX.

The exchange crashed amid a liquidity crunch and allegations of misused funds by its CEO, Sam Blankman Fried. A bailout by Binance was possible, but the deal fell through because of FTX’s troubled finances and implications of fraud.

The rapid downfall of FTX shocked the financial industry, and the crash had a massive ripple effect throughout the crypto market, affecting consumer confidence. Widespread worries about inflation, as well as steady interest rate hikes, affected broader markets. Bitcoin’s price continued to be a gauge of overall crypto health in many ways, plunging below $20,000 by the end of December, 2022.

2023: $16,500 to $44,000

January 2023 saw Bitcoin’s price increase to around $23,300, sparking hopes that the crypto winter had begun to thaw. Meanwhile, other cryptocurrencies began showing similar price patterns in Q1.

The rest of 2023 proved to be fruitful for those who were able to hold on through the crypto winter. At mid-year, Bitcoin’s price had topped $30,000 once again, and while there were some slight declines, the crypto finished the year strong. By December 2023, Bitcoin’s price notched a high of $44,705, before closing the year just above $42,000.

2024: $42,000 to $100,000+

Bitcoin would hit new benchmarks in 2024, breaking the $100,000 mark for the first time. In January of that year, the SEC would allow Bitcoin to be accessed via exchange-traded funds (ETFs), which led to the addition of several new funds to the market.

The introduction of physical Bitcoin ETFs brought major price increases, as crypto users rushed to buy shares. Bitcoin’s price surged to $63,913 in February 2024, then to $73,750 in March.

After this peak, prices would decline slightly, hovering between $65,000 and $73,000 for most of the year. In November, Bitcoin’s price brushed $100,000, before finally surging past that figure in December. That month, it reached $108,268, ending the year at $93,429.

2025: $94,000 to $124,000

Building off the momentum of 2024, Bitcoin has continued to push toward new heights for much of 2025. Despite some dips in the first quarter, the cryptocurrency reached its highest price ever in mid-August, cresting $124,457. The price fell back slightly to below $110,000 later that month.

Part of the increase can be attributed to ongoing interest in Bitcoin ETFs, which offer exposure to cryptocurrency without having to buy individual coins. Market sentiment has also moved in a more positive direction this year, thanks in part to the current administration’s stance on cryptocurrency.

In July 2025, U.S. securities regulators announced plans to modernize crypto rulemaking, which could pave the way for further innovation in the digital currency space. Dubbed “Project Crypto”, it would make a major shift in the market and potentially make the U.S. a leader in the cryptocurrency market. What that might mean for Bitcoin pricing going forward remains to be seen.

The Takeaway

Bitcoin’s historical price records are a mix of surges and setbacks, but even through crashes, it’s continued to attract interest from buyers and sellers.

As the oldest and still the largest form of crypto, BTC has gone from being worth a fraction of a penny to about $110,000 in mid-2025, which is nothing short of impressive. However, cryptocurrencies are highly volatile, and past performance doesn’t guarantee future results.

Soon, SoFi members will be able to buy, sell, and hold cryptocurrencies, such as Bitcoin, Ethereum, and more, and manage them all seamlessly alongside their other finances. This, however, is just the first of an expanding list of crypto services SoFi aims to provide, giving members more control and more ways to manage their money.

FAQ

What was the highest price Bitcoin has ever reached?

Bitcoin reached its highest price in mid-August 2025, when it was briefly valued at $124,457. As of late August 2025, the price held above $110,000.

When was Bitcoin worth $1?

Bitcoin reached $1 in early 2011, after hovering around the $0.30 to $0.40 mark for most of 2010. In mid-2011, the price jumped to $30 before tapering off to around $2 to close out the year.

What was the original price of Bitcoin?

The first recorded price of Bitcoin was $0.00099. This price was notched in 2009, when a BitcoinTalk forum member exchanged 5050 Bitcoin with another forum member for $5.02 through PayPal.

If you bought $1,000 in Bitcoin 10 years ago, how much would it be worth today?

If you bought $1,000 in Bitcoin 10 years ago, in 2015, your Bitcoin would be worth approximately $405,000, as of August 2025. That would equate to a 40,425% rate of return on your money.

How many times has Bitcoin “crashed”?

Historically, Bitcoin has crashed nearly a dozen times, with some of the most notable crashes occurring in June 2011, April 2013, and December 2017. Bitcoin crashes occur when there are extreme price fluctuations that cause sharp declines. These fluctuations may be driven by market speculation, regulatory concerns, and macroeconomic factors, such as talk of interest rate hikes or rising inflation.

What is the significance of the Bitcoin halving?

Bitcoin halving is designed to reduce the supply of new Bitcoins entering the market. Halving occurs every four years and cuts the number of new coins created by 50%. The theory behind halving is that scarcity should lead to price appreciation if demand for Bitcoin remains high.

About the author

Brian Nibley

Brian Nibley is a freelance writer, author, and investor who has been covering the cryptocurrency space since 2017. His work has appeared in publications such as MSN Money, Blockworks, Business Insider, Cointelegraph, Finance Magnates, and Newsweek. Read full bio.

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The payback period is when an investment generates enough cashflow or value to cover its initial cost. It’s the time it takes to get to the break-even point. Knowing the payback period is something that investors, corporations, and consumers use as a way to gauge whether an investment or purchase is likely to be profitable or worthwhile.

For example, if a $1 million investment in new technology is likely to increase company revenue by $200,000 a year, the payback period for that technology is five years.

A longer payback period is associated with higher risk, and a shorter payback period is associated with lower risk and a greater potential for returns. While calculating the payback period is fairly straightforward, it doesn’t take into account a number of factors, including the time value of money.

What Is the Payback Period?

The payback period is the amount of time it will take to recoup the initial cost of an investment, or to reach its break-even point.

Although investors who are thinking about buying stock in a certain company may want to consider the payback period for certain capital projects at that company (and whether those might support growth), the payback period is more commonly used for budgeting purposes by companies deciding how best to allocate resources for maximum return.

While the payback period is only an estimate, and it doesn’t factor in unforeseen or future outcomes, it’s a useful tool that can provide a baseline for assessing the relative value of one investment over another.

The Value of Time

The payback period can help investors decide between different investments that may be similar, when investing online or via a broker-dealer, as they’ll often want to choose the one that will pay back in the shortest amount of time.

The longer money remains locked up in an investment without earning a return, the more time an investor must wait until they can access that cash again, and the more risk there is of losing the initial investment capital.

Recommended: How to Calculate Expected Rate of Return

How to Calculate the Payback Period

The payback period is calculated by dividing the cost of the investment by the annual cash flow until the cumulative cash flow is positive, which is the payback year. Payback period is generally expressed in years.

Prior to calculating the payback period of a particular investment, one might consider what their maximum payback period would be in order to move forward with the investment. This will help give them some parameters to work with when making investment decisions.

Payback Period Formula (Averaging Method)

There are two basis payback period formulas:

Payback Period = Initial Investment / Yearly Cash Flow

Using the averaging method, the initial amount of the investment is divided by annualized cash flows an investment is projected to generate. This works well if cash flows are predictable or expected to be consistent over time, but otherwise this method may not be very accurate.

Payback Formula (Subtraction Method)

Using the subtraction method, an investor can start by subtracting individual annual cash flows from the initial investment amount, and then do the division. This method is more effective if cash flows vary from year to year.

Payback Period = the last year with negative cash flow + (Amount of cash flow at the end of that year / Cash flow during the year after that year)

Other factors

Investors might also choose to add depreciation and taxes into the equation, to account for any lost value of an investment over time.

Consumers may want to consider the payback period when making repairs to their home, or investing in a new amenity. For example: How long would it take to recoup the cost of installing a fuel-efficient furnace?

Benefits of Using the Payback Period

The payback period is simple to understand and calculate. It can provide individuals and companies with valuable insights into potential investments, and help them decide which option provides the best return on investment (ROI). It also helps with assessing the risk of different investments. Advantages include:

•  Easy to understand

•  Simple to calculate

•  Tool for risk assessment

•  Helps with comparing and choosing investment options

•  Provides insights for financial planning

•  Other calculations, such as net present value and internal rate of return, may not provide similar insights

•  A look at the amount of time it takes to recoup an investment

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Downsides of Using the Payback Period

Although the payback period can be a useful calculation for individuals and companies considering and comparing investments, it has some downsides.

A Limited Time Period

The calculation only looks at the time period up until the initial investment will be recouped. It doesn’t consider the earnings the investment will bring in after that, which may either be higher or lower, and could determine whether it makes sense as a long-term investment.

If earnings will continue to increase, a longer payback period might be acceptable. If earnings might decrease after a certain number of years, the investment may not be a good idea even if it breaks even quickly. On the other hand, an investment with a short lifespan could need replacement shortly after its payback period, making it a potentially poor investment.

Other Factors May Add or Subtract Value

The payback period also doesn’t take into consideration other ways an investment might bring value, such as partnerships or brand awareness. This can result in investors overlooking the long-term benefits of the investment since they’re too focused on short-term ROI.

The payback period equation also doesn’t take into account the effects an investment might have on the rest of the company’s operations. For instance, new equipment might require a significant amount of expensive power, or might not be able to run as often as it would need to in order to reach the payback goal.

The Time Value of an Investment

Another limitation of the payback period is that it doesn’t take the time value of money (TVM) into account. The time value of money is the idea that cash will be worth more in the future than it is worth today, due to the amount of interest that it can generate.

Not only does this apply to the initial capital put into an investment, but it’s also important because as an investment generates returns, that cash can then be reinvested into something else that earns interest or income. This is another reason that a shorter payback period could be viewed as an attractive investment.

When Would an Investor Use the Payback Period?

The payback period can apply to personal investments such as solar panels or property maintenance, or investments in equipment or other assets that a company might consider acquiring.

Often an investment that requires a large amount of capital upfront generates steady or increasing returns over time, although there is also some risk that the returns won’t turn out as hoped or predicted.

How Companies Use the Payback Period

Calculating payback periods is especially important for startup companies with limited capital that want to be sure they can recoup their money without going out of business. Companies also use the payback period to select between different investment opportunities or to help them understand the risk-reward ratio of a given investment.

Knowing the payback period is helpful if there’s a risk of a project ending in the future. For example, if a company might lose a lease or a contract, the sooner they can recoup any investments they’re making into their business the less risk they have of losing that capital.

Any particular project or investment can have a short or long payback period. A short period means the investment breaks even or gets paid back in a relatively short amount of time by the cash flow generated by the investment, whereas a long period means the investment takes longer to recoup. How investors understand that period will depend on their time horizon.

The Takeaway

Understanding the potential payback period for a given investment can help you gauge possible risks and reward for a certain asset, because it helps you to calculate when you’re likely to recoup your initial investment. You can also use the payback period when making large purchase decisions and considering their opportunity cost.

Understanding the way that companies calculate their payback period is also helpful to determine their financial viability and whether it makes sense for you to invest in them as part of your portfolio.

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FAQ

What are the two payback period formulas?

Two of the simplest and most common payback period formulas are the averaging method and the subtraction method.

What does the payback period refer to in investing?

The payback period is the estimated amount of time it will take to recoup an investment or to break even. Generally, the longer the payback period, the higher the risk of the associated investment.

What are some downsides of using the payback period?

The payback period may not consider the earnings an investment brings in following an initial investment, or other ways that an investment could generate value. It also doesn’t take into account the time value of money.

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