Bitcoin’s price is the source of endless fascination among media outlets and everyday consumers. But somewhat ironically, many devoted enthusiasts argue it’s far more important to focus on levels of adoption and the technology that underpins the world’s biggest cryptocurrency.
Even if you’re unfamiliar with in-depth Bitcoin price analysis, you’ll likely know two things. The first is that BTC has surged dramatically since launch back in January 2009, when each one was worth pennies. The second concerns Bitcoin’s volatility. Dizzying spikes upwards have also been accompanied by brutal crashes — and in some cases, BTC has lost more than half of its value in single two-day periods.
A brief introduction
Let’s rewind all the way back to 2010 now, about a year after the first genesis block of the Bitcoin blockchain was created. Dedicated forums were established to discuss the technology — but back then, only a small band of cryptographers were interested. Given how no trading platforms existed to facilitate transactions, the price of one Bitcoin was yet to be established. One user attempted to auction off 10,000 BTC for a total price of $50, but no one was interested. Little did anyone know that Bitcoin’s future price would value this haul at hundreds of millions of dollars.
A big milestone came in 2011, when Bitcoin first achieved parity with the dollar. It surged by 3,200% and hit $32 in June of that year, before slumping back down to $2. When it comes to the highest Bitcoin price seen over the past decade, it’s interesting to note that they reliably happen in four-year cycles — with 2013, 2017 and 2021 all delivering handsome gains.
One of the most significant influences on the price of Bitcoin are halving events, and this is where the number of new BTC entering circulation is reduced by 50%. This automatically happens every four years – with past halvings enacted in 2012, 2016 and 2020 – with the effect of this supply squeeze emerging 12 to 18 months later.
Bitcoin’s price graph shows that the ATH set in 2013 stood at $1,242 – securing gains of more than 500% in the space of a month. You’d need to fast forward four years before these prices were seen again. At the start of 2017, to buy Bitcoin you could at about $1,000, but a dramatic bull run would see prices spike to $20,000 by December of that year. Brutal sell-offs followed, with BTC falling 80% and tumbling below $4,000 in 2018.
And in a sign of history repeating itself, we wouldn’t see $20,000 emerge again until after the halving that occurred in May 2020. In the space of six months — from mid-October 2020 through until April 2021, BTC surged from about $11,000 to new all-time highs of $64,683.
Bitcoin’s price today: Things are different
The circumstances surrounding the current Bitcoin price are hugely different right now. A greater number of institutional investors now hold BTC on their balance sheets, including publicly listed companies like Tesla and MicroStrategy. A country has adopted the cryptocurrency as legal tender too, and exchange-traded funds are being approved which allow people to gain indirect exposure to BTC without having to own the underlying asset. Bitcoin has also been informed by how the number of coins yet to discover continues to dwindle — and how this coincides with ever-increasing numbers of retail investors joining the ecosystem for the first time.
Although current Bitcoin prices are in relatively uncharted territory — October 2021 marked the first time that BTC had ever had a weekly close above $60,000 — some crypto enthusiasts argue its performance has consistently repeated itself every four years, for three times in a row. Of course though, an asset can’t stay parabolic forever, and some analysts believe Bitcoin’s volatility will even out in the years to come.
One of them is Pantera Capital’s Dan Morehead, who recently stated that the era of big bull markets is over. He wrote: “Each subsequent halving’s impact on price will likely taper off in importance as the ratio of reduction in the supply of new bitcoins from previous halvings to the next decreases.”
Although this might make Bitcoin less attractive from a price appreciation point of view, Morehead also pointed out that this could also mitigate the impact of bear markets — and mean dramatic plunges such as the 80% decline we saw in 2018 would now become a lot less likely.