A Brief History of Bitcoin Prices
This module provides an overview of how bitcoin gained global traction after 14 years of development since its inception
Over the past decade since the emergence of Bitcoin in 2009, its price has been highly volatile, experiencing five price peaks and several declines of more than 50%. Generally, this can be affected by political, economic, and regulatory factors as well as market sentiments, which contribute to its price unpredictability. However, these factors have not affected the popularity and growth of bitcoin at the macro level, as its long-term price growth rate far exceeds that of traditional high-quality assets such as the Nasdaq 100 Index and gold, with a compound annual growth rate of nearly 200%, which is why it is hailed as the “eternal bull market” by many.
As of the end of 2022, Bitcoin still has the highest market value among cryptocurrencies, with the current price of hovering around $17,000. Despite a pullback of over 75% from its previous high of $69,000. Its market value is still as high as $320 billion, slightly below 50% of the overall cryptocurrency market dominance. In this module, we will review the price history of bitcoin and several representative events in this domain, to understand how bitcoin has developed from then-little-known to being known worldwide. In addition, we will also explore possible future trends of bitcoin.
Initial stage
2009 ・ Bitcoin was launched
Bitcoin, the first-ever cryptocurrency, was launched in early 2009 at a price of $0 and could not be exchanged for other fiat currencies or physical items. At that time, only a very small number of participants recorded and verified transactions using their personal computers, or sent bitcoins between different wallet addresses for testing. For a long time, the price of bitcoin was slightly above $0, and the mining rewards were not even enough to cover the electricity expenses of computers.
2010 ・ Use 10,000 bitcoins to buy 2 pizzas
On May 18, 2010, Laszlo Hanyecz, an American software developer, posted on the bitcoin forum BitcoinTalk, asking someone to deliver him two pizzas in exchange for 10,000 bitcoins. Although 10,000 Bitcoins could be exchanged for $41 on the Internet at that time, it was the first-ever documented purchase using cryptocurrency, where 10,000 BTC = 2 pizzas.
2011 ・ Bitcoin broke through $1
At the beginning of 2011, the Electronic Frontier Foundation based in California announced that it would accept donations in bitcoin, which drove a sharp rise in the price of bitcoin in the next six months. In February, bitcoin hit $1 for the first time and traded at a record high of $30 on Mt. Gox, the world’s largest bitcoin exchange at the time, after weeks of price rising. However, shortly afterwards, the Electronic Frontier Foundation announced that it would not accept bitcoins any longer, nor would it endorse bitcoin, to avoid the public’s misunderstanding or controversies. This caused bitcoin to enter the bear market for the first time in history, which recorded a price fall of more than 90% within half a year.
2013 ・ First halving drove the price skyrocketing to $1,100
On November 28, 2012, bitcoin witnessed the first halving of its block rewards. Driven by the reduction in the pace of Bitcoin issuance and that Electronic Frontier Foundation announcing that it would accept bitcoins again, bitcoin witnessed the highest return on investment in 2013. Starting at $13, it rose all the way to a high of $250 in April, then fell back before surging again to $1,100, on par with the price of an ounce of gold at the time. The market cap of bitcoin reached $1 billion for the first time.
2014 ・ Hacks occurred frequently and bitcoin entered the second bear market
At the end of 2013, the Federal Bureau of Investigation (FBI) shut down Silk Road, the then-most popular online darknet for bitcoin payment. Shortly thereafter, another anonymous trading market, Sheep Marketplace, was hacked and 96,000 bitcoins were stolen. In late February of the following year, the exchange Mt. Gox declared bankruptcy after being hacked with 850,000 bitcoins. All of the negative news pushed bitcoin into the second bear market.
2016 ・ Second halving of mining rewards drove bitcoin to hit a historical high of $1,100
After nearly two years of bear market, bitcoin underwent the second halving on July 19, 2016. Its price then rebounded and traded above a historical high of $1,100 in mid-April 2017, breaking the market rumors that 1 BTC would never exceed the price of 1 ounce of gold.
Becoming mainstream
2017 ・ Bitcoin price rose sharply to $20,000 in a new round of bull market
The high price of bitcoin once again attracted public attention. The number of physical stores that accept bitcoin as a payment method increased rapidly. According to Coinmap, there were about 16,000 physical stores worldwide that accepted bitcoin for payments at the end of 2017. In the same year, the U.S. exchange Coinbase also launched institutional services for digital currency custody. And the news that bitcoin futures were listed on the Chicago Mercantile Exchange pushed the price to a high of $20,000. The return on investment of bitcoin in 2017 was as high as 20 times.
2018 ・ The arms race for computing power led to extensive selloffs among miners, causing the price to drop to $3,000 at the end of 2018
The astonishing rise of bitcoin has led to the rapid rise of the bitcoin mining industry. Many people were encouraged to buy equipment for mining bitcoins. Since the end of 2017, the difficulty of computing power in the bitcoin network has skyrocketed, and bitcoin mining has become an arms race. In order to pay for the huge equipment and electricity costs, miners continue to sell bitcoins, causing the price to drop all the way. By the end of 2018, bitcoin crashed to $3,000. As a result, many miners had to shut down their machines and sell equipment. The crash was considered by many the first mining disaster since bitcoin’s inception.
Global Attention & Participation of Mainstream Financial Institutions
2020 ・ The COVID-19 sent the global crypto market to a bearish trend. The third bitcoin halving marked a turning point
In March 2020, due to the significant impact of COVID-19 epidemic on global economies, governments of various countries successively started to implement easy monetary policies, which caused both the stock market and the crypto market to rise. Benefiting from the boom of DeFi, the crypto market was propelled to grow with new dynamics.
After the third bitcoin halving on May 11, 2020, the price began to rebound from its bottom, rising all the way from $4,000 to a new high of $30,000 at the end of the year.
2021 ・The capital inflows of mainstream institutions contributed to a flourishing market
The money printing bailouts in various countries have caused inflationary pressure. Many large institutions, such as Microstrategy, Tesla, Galaxy Digital Holdings, and Square, began to purchase bitcoin as an investment.
On April 14, 2021, after the U.S. exchange Coinbase was listed on NASDAQ, the price of bitcoin reached $64,000. After the SEC approved the first bitcoin futures ETF, its price hit $68,000, a 15-fold increase that far exceeds the performance of all traditional financial commodities. As more people were amazed at bitcoin’s astonishing long-term investment returns, they began to buy bitcoins as a means to avoid asset depreciation. During this period, bitcoin’s market value reached $1 trillion.
2022 ・ War, interest rate hike, and institution collapse
In early 2022, capitals were gradually withdrawn from the highly volatile crypto market due to several large events, including public concerns about inflation in the financial market and expectations about the Fed’s interest rate hike, as well as the outbreak of the Russia-Ukraine war in February. The collapse of LUNA and UST in May led to the bankruptcy of the large crypto fund Three Arrows Capital (3AC) and a chain of institutional liquidations, which further caused bitcoin to drop to $17,000.
2022 ・ FTX went bankrupt
On November 2, 2022, CoinDesk released a report revealing that Alameda Research used illiquid FTT collateral to obtain a large amount of loans from the FTX exchange, raising questions in the crypto market about the FTX’s undisclosed leverage and repayment ability.
A large number of panicked users made withdrawals, causing a run on the exchange. Then the bubble burst in less than 10 days. As FTX exchange could not process withdrawals due to its unauthorized use of customers’ assets, it declared bankruptcy, which triggered the collapse of the crypto market overall. Affected by this, bitcoin tumbled below $15,600 and major exchanges then provided proof of reserves to restore user confidence.
However, this was not the end of the story. Many institutions have been affected by this incident and have declared bankruptcy one after another. The short-term panic caused several other exchanges that misappropriated assets to experience runs and thus could not process withdrawals. They had to file for bankruptcy. Since then, the credibility of centralized institutions in the crypto market has been seriously questioned.
Highlights
- When bitcoin was released in early 2009, its price was close to $0. There were only a few people participating in the transaction verification and testing until 2016.
- Bitcoin saw 20-times rise in 2017, making it well-known to more people. However, in 2018, the price fell, causing miners to sell off their equipment. The market then started a 2-year-long bearish trend.
- In 2020, under the macro environment where the global market was affected by COVID-19, governments in various countries implement easy monetary policies, driving the stock and the crypto markets to rise. Due to the bitcoin halving and the emergence of DeFi, cryptocurrency began to become mainstream.
- In 2021, mainstream institutions and capitals entered the crypto market, which saw several major events happening, including the launch of multiple bitcoin futures ETFs and the listing of Coinbase, the largest exchange in the United States. Bitcoin’s price reached a high of $64,000 by the end of the year.
- In early 2022, due to expectations of the Fed’s interest rate raise and the outbreak of the Russia-Ukraine war, the financial market was in turmoil and capitals gradually exited from the highly volatile cryptocurrencies.
- In May 2022, the depegging of UST led LUNA to collapse. The bankruptcy of 3AC triggered a chain of liquidation among institutions, which caused the price of bitcoin to drop to $17,000 and posed a potential risk for the collapse of FTX.
- In November 2022, FTX declared bankruptcy as it was unable to process a large amount of withdrawal demands due to its misappropriation of assets, which triggered another crash, leading the price of BTC to fall to $15,600. Many institutions were affected and announced closures one after another, and the credibility of many exchanges was questioned.
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A Brief History of Bitcoin Prices
This module provides an overview of how bitcoin gained global traction after 14 years of development since its inception
Over the past decade since the emergence of Bitcoin in 2009, its price has been highly volatile, experiencing five price peaks and several declines of more than 50%. Generally, this can be affected by political, economic, and regulatory factors as well as market sentiments, which contribute to its price unpredictability. However, these factors have not affected the popularity and growth of bitcoin at the macro level, as its long-term price growth rate far exceeds that of traditional high-quality assets such as the Nasdaq 100 Index and gold, with a compound annual growth rate of nearly 200%, which is why it is hailed as the “eternal bull market” by many.
As of the end of 2022, Bitcoin still has the highest market value among cryptocurrencies, with the current price of hovering around $17,000. Despite a pullback of over 75% from its previous high of $69,000. Its market value is still as high as $320 billion, slightly below 50% of the overall cryptocurrency market dominance. In this module, we will review the price history of bitcoin and several representative events in this domain, to understand how bitcoin has developed from then-little-known to being known worldwide. In addition, we will also explore possible future trends of bitcoin.
Initial stage
2009 ・ Bitcoin was launched
Bitcoin, the first-ever cryptocurrency, was launched in early 2009 at a price of $0 and could not be exchanged for other fiat currencies or physical items. At that time, only a very small number of participants recorded and verified transactions using their personal computers, or sent bitcoins between different wallet addresses for testing. For a long time, the price of bitcoin was slightly above $0, and the mining rewards were not even enough to cover the electricity expenses of computers.
2010 ・ Use 10,000 bitcoins to buy 2 pizzas
On May 18, 2010, Laszlo Hanyecz, an American software developer, posted on the bitcoin forum BitcoinTalk, asking someone to deliver him two pizzas in exchange for 10,000 bitcoins. Although 10,000 Bitcoins could be exchanged for $41 on the Internet at that time, it was the first-ever documented purchase using cryptocurrency, where 10,000 BTC = 2 pizzas.
2011 ・ Bitcoin broke through $1
At the beginning of 2011, the Electronic Frontier Foundation based in California announced that it would accept donations in bitcoin, which drove a sharp rise in the price of bitcoin in the next six months. In February, bitcoin hit $1 for the first time and traded at a record high of $30 on Mt. Gox, the world’s largest bitcoin exchange at the time, after weeks of price rising. However, shortly afterwards, the Electronic Frontier Foundation announced that it would not accept bitcoins any longer, nor would it endorse bitcoin, to avoid the public’s misunderstanding or controversies. This caused bitcoin to enter the bear market for the first time in history, which recorded a price fall of more than 90% within half a year.
2013 ・ First halving drove the price skyrocketing to $1,100
On November 28, 2012, bitcoin witnessed the first halving of its block rewards. Driven by the reduction in the pace of Bitcoin issuance and that Electronic Frontier Foundation announcing that it would accept bitcoins again, bitcoin witnessed the highest return on investment in 2013. Starting at $13, it rose all the way to a high of $250 in April, then fell back before surging again to $1,100, on par with the price of an ounce of gold at the time. The market cap of bitcoin reached $1 billion for the first time.
2014 ・ Hacks occurred frequently and bitcoin entered the second bear market
At the end of 2013, the Federal Bureau of Investigation (FBI) shut down Silk Road, the then-most popular online darknet for bitcoin payment. Shortly thereafter, another anonymous trading market, Sheep Marketplace, was hacked and 96,000 bitcoins were stolen. In late February of the following year, the exchange Mt. Gox declared bankruptcy after being hacked with 850,000 bitcoins. All of the negative news pushed bitcoin into the second bear market.
2016 ・ Second halving of mining rewards drove bitcoin to hit a historical high of $1,100
After nearly two years of bear market, bitcoin underwent the second halving on July 19, 2016. Its price then rebounded and traded above a historical high of $1,100 in mid-April 2017, breaking the market rumors that 1 BTC would never exceed the price of 1 ounce of gold.
Becoming mainstream
2017 ・ Bitcoin price rose sharply to $20,000 in a new round of bull market
The high price of bitcoin once again attracted public attention. The number of physical stores that accept bitcoin as a payment method increased rapidly. According to Coinmap, there were about 16,000 physical stores worldwide that accepted bitcoin for payments at the end of 2017. In the same year, the U.S. exchange Coinbase also launched institutional services for digital currency custody. And the news that bitcoin futures were listed on the Chicago Mercantile Exchange pushed the price to a high of $20,000. The return on investment of bitcoin in 2017 was as high as 20 times.
2018 ・ The arms race for computing power led to extensive selloffs among miners, causing the price to drop to $3,000 at the end of 2018
The astonishing rise of bitcoin has led to the rapid rise of the bitcoin mining industry. Many people were encouraged to buy equipment for mining bitcoins. Since the end of 2017, the difficulty of computing power in the bitcoin network has skyrocketed, and bitcoin mining has become an arms race. In order to pay for the huge equipment and electricity costs, miners continue to sell bitcoins, causing the price to drop all the way. By the end of 2018, bitcoin crashed to $3,000. As a result, many miners had to shut down their machines and sell equipment. The crash was considered by many the first mining disaster since bitcoin’s inception.
Global Attention & Participation of Mainstream Financial Institutions
2020 ・ The COVID-19 sent the global crypto market to a bearish trend. The third bitcoin halving marked a turning point
In March 2020, due to the significant impact of COVID-19 epidemic on global economies, governments of various countries successively started to implement easy monetary policies, which caused both the stock market and the crypto market to rise. Benefiting from the boom of DeFi, the crypto market was propelled to grow with new dynamics.
After the third bitcoin halving on May 11, 2020, the price began to rebound from its bottom, rising all the way from $4,000 to a new high of $30,000 at the end of the year.
2021 ・The capital inflows of mainstream institutions contributed to a flourishing market
The money printing bailouts in various countries have caused inflationary pressure. Many large institutions, such as Microstrategy, Tesla, Galaxy Digital Holdings, and Square, began to purchase bitcoin as an investment.
On April 14, 2021, after the U.S. exchange Coinbase was listed on NASDAQ, the price of bitcoin reached $64,000. After the SEC approved the first bitcoin futures ETF, its price hit $68,000, a 15-fold increase that far exceeds the performance of all traditional financial commodities. As more people were amazed at bitcoin’s astonishing long-term investment returns, they began to buy bitcoins as a means to avoid asset depreciation. During this period, bitcoin’s market value reached $1 trillion.
2022 ・ War, interest rate hike, and institution collapse
In early 2022, capitals were gradually withdrawn from the highly volatile crypto market due to several large events, including public concerns about inflation in the financial market and expectations about the Fed’s interest rate hike, as well as the outbreak of the Russia-Ukraine war in February. The collapse of LUNA and UST in May led to the bankruptcy of the large crypto fund Three Arrows Capital (3AC) and a chain of institutional liquidations, which further caused bitcoin to drop to $17,000.
2022 ・ FTX went bankrupt
On November 2, 2022, CoinDesk released a report revealing that Alameda Research used illiquid FTT collateral to obtain a large amount of loans from the FTX exchange, raising questions in the crypto market about the FTX’s undisclosed leverage and repayment ability.
A large number of panicked users made withdrawals, causing a run on the exchange. Then the bubble burst in less than 10 days. As FTX exchange could not process withdrawals due to its unauthorized use of customers’ assets, it declared bankruptcy, which triggered the collapse of the crypto market overall. Affected by this, bitcoin tumbled below $15,600 and major exchanges then provided proof of reserves to restore user confidence.
However, this was not the end of the story. Many institutions have been affected by this incident and have declared bankruptcy one after another. The short-term panic caused several other exchanges that misappropriated assets to experience runs and thus could not process withdrawals. They had to file for bankruptcy. Since then, the credibility of centralized institutions in the crypto market has been seriously questioned.
Highlights
- When bitcoin was released in early 2009, its price was close to $0. There were only a few people participating in the transaction verification and testing until 2016.
- Bitcoin saw 20-times rise in 2017, making it well-known to more people. However, in 2018, the price fell, causing miners to sell off their equipment. The market then started a 2-year-long bearish trend.
- In 2020, under the macro environment where the global market was affected by COVID-19, governments in various countries implement easy monetary policies, driving the stock and the crypto markets to rise. Due to the bitcoin halving and the emergence of DeFi, cryptocurrency began to become mainstream.
- In 2021, mainstream institutions and capitals entered the crypto market, which saw several major events happening, including the launch of multiple bitcoin futures ETFs and the listing of Coinbase, the largest exchange in the United States. Bitcoin’s price reached a high of $64,000 by the end of the year.
- In early 2022, due to expectations of the Fed’s interest rate raise and the outbreak of the Russia-Ukraine war, the financial market was in turmoil and capitals gradually exited from the highly volatile cryptocurrencies.
- In May 2022, the depegging of UST led LUNA to collapse. The bankruptcy of 3AC triggered a chain of liquidation among institutions, which caused the price of bitcoin to drop to $17,000 and posed a potential risk for the collapse of FTX.
- In November 2022, FTX declared bankruptcy as it was unable to process a large amount of withdrawal demands due to its misappropriation of assets, which triggered another crash, leading the price of BTC to fall to $15,600. Many institutions were affected and announced closures one after another, and the credibility of many exchanges was questioned.
🎥・Main Video
📄・Related Articles