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Bitcoin: A Brief Price History of the First Cryptocurrency (Updated 2023)
Since its inception, bitcoin has become one of the most valuable and volatile assets in the market — although it's currently priced much lower, it peaked at more than US$68,000 in 2021.
In just over a decade, bitcoin has grown a cult-like following and surged to impressive heights. Now the cryptocurrency of choice, its meteoric rise has been unlike any other commodity, resource or asset — and it's seeing gains again in 2023.
Bitcoin, the most well-known cryptocurrency, has paved the way for the growing cryptocurrency asset class, surging to an all-time high of US$68,649.05 on November 10, 2021. Benefiting from excess cash in the market and investor interest, the price of bitcoin rose more than 1,200 percent between March 2020 and November 2021. While bitcoin's bullish ascent crashed in 2022 and it started 2023 around the US$16,000 mark, its price spiked toward the end of Q1, moving up to US$28,161 as of March 21.
What spurred bitcoin's price rise and fall, and where is it now? Read on to find out.
What is Bitcoin?
Created to counter the 2008 financial crisis, bitcoin has weathered extreme volatility, spiking to US$19,650 in 2017 before spending years locked below US$10,000. The cryptocurrency was unveiled in late 2008 with the goal of revolutionizing the monetary system, and was first introduced in a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.”
The nine page manifesto was penned by a notoriously elusive person (or persons) who used the pseudonym Satoshi Nakamoto, and it lays out a compelling argument and groundwork for the creation of a cyber-currency.
Cryptographically secured, the peer-to-peer electronic payment system was designed to be transparent and resistant to censorship, using the power of blockchain technology to create an immutable ledger preventing double spending. The true allure for Bitcoin’s early adopters was in its potential to wrestle power away from banks and financial institutes and give it to the masses.
This was especially enticing as the fallout from the 2008 financial collapse ricocheted internationally. Described as the worst financial crisis since the Great Depression, US$7.4 billion in value was erased from the US stock market in 11 months, while the global economy shrank by an estimated US$2 trillion.
Bitcoin price in US dollars, 2011 to March 2023.
Chart via Trading Economics.
In July 2010, bitcoin began trading at US$0.0008, climbing to US$0.08 by the end of the month. The cryptocurrency then slowly rose into the US$10 range until it spiked to US$250 in April 2013.
How many bitcoins are there?
Unlike traditional currencies that can increase circulation through printing, the number of bitcoins is finite. There are 21 million in existence, of which 19,144,112 are in circulation, leaving just under 2 million to be mined.
This limit is a core function of Bitcoin's algorithm, and was designed to offset inflation by maintaining scarcity.
A new bitcoin is created when a bitcoin miner uses highly specialized software to complete a block of transaction verifications on the Bitcoin blockchain. Roughly 900 bitcoins are currently mined per day; however, after 210,000 blocks are completed, the bitcoin protocol automatically reduces the number of new coins issued by half.
Halvings have occurred every four years since 2012, with the most recent happening in May 2020. Halving not only counteracts inflation, but also supports the cryptocurrency’s value by ensuring that its price will increase if demand remains the same.
At the moment, miners are paid 6.25 bitcoin for every block they complete.
How did COVID-19 affect the bitcoin price?
January 1, 2016, marked the beginning of bitcoin’s sustained price rise. It started the year at US$433 and ended it at US$959 — a 121 percent value increase in 12 months.
The next year brought the mainstream adoption of bitcoin. Between January and December 2017, additional attention, the introduction of new cryptocurrencies and coverage from mainstream financial media added 1,729 percent to the crypto-coin’s value — it rose from US$1,035.24 in January to US$18,940.57 in December.
This record-setting threshold was unsustainable, and bitcoin fell victim to its own volatility, which steadily eroded its previous gains. Despite that decrease in value, the virtual currency still held above US$3,190, a low it has not hit again since that time.
Since launching in 2008, opponents of bitcoin have used its short history to defend their hesitance. Questions have arisen around how bitcoin would perform during a financial crisis or recession, as the coin is extremely susceptible to uncertainty.
2020 proved a testing ground for the digital coin’s ability to weather financial upheaval. Starting the year at US$6,950.56, a widespread selloff in March brought its value to US$4,841.67 — a 30 percent decline.
The low created a buying opportunity that helped bitcoin gain back its losses by May. Like safe-haven metal gold, bitcoin began to emerge as a protective asset for the Millennial and Generation Z crowd. The rally continued throughout 2020, and the digital asset ended the year at US$29,402.64, a 323 percent year-over-year increase and a 507 percent rise from its March drop.
By comparison, gold, one of the best-performing commodities of 2020, added 38 percent to its value from the low in March through December, setting what was then an all-time high of US$2,060 per ounce in August.
What was the highest price for bitcoin?
Bitcoin’s ascent continued in 2021, rallying to an all-time high of US$68,649.05 in November, a 98.82 percent increase from January. The digital asset had shed some of its value by the end of the year, ending at US$47,897.16 — still a 62 percent year-over-year increase.
So what led to this all-time high? A few different factors acted as price catalysts.
Much of the growth in 2021 was attributed to risk-on investor appetite, as well as Tesla’s (NASDAQ:TSLA) purchase of US$1.5 billion worth of bitcoin. Activity was further compounded when Tesla reported plans to begin accepting bitcoin as payment for its electric vehicles. However, following some criticism from investors and environmentalists, the electric car maker announced in 2021 that it would be conducting due diligence on the amount of renewable energy used to mine the cryptocurrency before allowing customers to buy cars with it; the option remained shelved as of early 2023.
Increased money printing in response to the pandemic also benefited bitcoin, as investors with more capital looked to diversify their portfolios. The success of the world’s first cryptocurrency amid the market ups and downs of 2020 and 2021 led to more interest and investment in other coins and digital assets as well. For example, 2021 saw the rise of the non-fungible token (NFT). Utilizing blockchain technology, NFTs are unique crypto assets that are stored, sold and traded digitally.
The NFT concept is widely used for art and other digital mediums to allow buyers to own a specific asset. It is estimated that the NFT market grew to more than US$40 billion in 2021, driven exclusively by cryptocurrencies, the only form of payment for NFTs.
Bitcoin’s mainstream usage may be a continued price catalyst as more businesses accept the digital token as payment; the growing market for digital assets, as well as the burgeoning metaverse, could all add momentum for the cryptocurrency space.
What is bitcoin at today?
While notoriety has catapulted the first digital currency to all-time highs, the primary headwind for the crypto coin is its frequent volatility, which was on full display in early 2022, when prices fell by more than 50 percent.
Market uncertainty continued to weigh heavily on the world’s first exclusively digital currency during the second quarter of 2022, sending values below US$20,000 for the first time since December 2020.
Prices for bitcoin remained rangebound through Q3 and into Q4, for the most part hovering between about US$19,000 and US$21,000. They ended Q4 by moving even lower to settle below US$17,500 through November and most of December.
2023 started on a bright note for the price of bitcoin, as it rallied in mid-January, moving back to nearly US$24,000. It then dropped in the second week of March down to around US$20,200, but the following days saw it rise again, sharply jumping over US$8,000 to US$28,211 by March 21 after the failure of multiple US banks alarmed investors.
Despite its significant price drop, bitcoin's powerful performance and future potential cannot be understated.
FAQs for investing in bitcoin
Will bitcoin benefit from the banking crisis?
The banking crisis in the US and elsewhere has already led to a swift rush to bitcoin from concerned investors. What started with the failure of Silicon Valley Bank on March 10 was followed by the collapse of Signature Bank two days later, leading to panic as investors and banking industry clients worried about what would come next.
UBS' (NYSE:UBS) acquisition of its failing Switzerland-based rival Credit Suisse (NYSE:CS) has stoked concerns further.
Bitcoin was established in the wake of the 2008 financial crisis as an alternative to the traditional banking industry, and in the past the price of bitcoin has often shifted on narrative and sentiment. However, increasing regulations and its historic volatility make it hard to predict where the cryptocurrency could move next, especially as the crisis continues to unfold.
How does crypto affect the banking industry?
Cryptocurrencies are an alternative to traditional banking, and tend to attract people interested in assets that are outside mainstream systems. According to data from Statista, 53 percent of crypto owners are between the ages of 18 and 34, showing that the industry is drawing younger generations who may be interested in decentralized digital options.
Privacy is a key draw for cryptocurrency owners, as is the fact that they are separated from third parties such as central banks. Additionally, crypto transactions, including purchases, sales and transfers, are often quick and have fewer associated fees than transactions going through the banking system in the typical manner.
That said, banks are starting to notice how popular cryptocurrencies are. As bitcoin and its compatriots become increasingly mainstream, many banks have begun to invest in cryptocurrencies and blockchain companies themselves.
What is a blockchain?
A blockchain is a digitized and decentralized public ledger of all cryptocurrency transactions.
Blockchains are constantly growing as completed blocks are recorded and added in chronological order. The mechanism by which digital currencies are mined, blockchain has become a popular investment space as the technology is increasingly being implemented in business processes across a variety of industries. These include banking, cybersecurity, networking, supply chain management, the Internet of Things, online music, healthcare and insurance.
How to buy bitcoin?
Bitcoin can be purchased through a variety of crypto exchange platforms and peer-to-peer crypto trading apps, and then held in a digital wallet. These include Coinbase Global (NASDAQ:COIN), CoinSmart Financial (OTC Pink:CONMF,NEO:SMRT), BlockFi, Binance and Gemini.
What is Coinbase?
Coinbase Global is a secure online cryptocurrency exchange that makes it easy for investors to buy, sell, transfer and store cryptocurrencies such as bitcoin.
This is an updated version of an article first published by the Investing News Network in 2021.
Don’t forget to follow us @INN_Technology for real-time updates!
Securities Disclosure: I, Lauren Kelly, hold no direct investment interest in any company mentioned in this article.
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