Thinking of Investing in Bitcoin? Here is Bitcoin's price history and some valuable insights that will help you make an informed decision.
We have a number of asset classes to invest in or store value. Don’t we? But Bitcoin has its unique craze among people. Bitcoin was introduced to the world in 2018 by Satoshi Nakomoto, who to date remains anonymous. Recently, Bitcoin celebrated its 13th birthday, the oldest of all cryptocurrencies.
Among all assets, Bitcoin had the most volatile trading history. Initially, Bitcoin was worth $0, and the first price surge happened in 2010 when the price hopped from a fraction of a penny to $0.09.
Bitcoin Historical Price
The factor that determines the price of every crypto asset is its market emotion or investor enthusiasm. When investors are satisfied with a coin’s promise, the price goes uptrend. The main motto of Bitcoin was to become the ideal solution to circumvent traditional financial systems after 2008’s economic collapse. Since then, Bitcoin has served its purpose as a medium of exchange and store of value.
Bitcoin gained its mainstream traction because it allows traders to bet against its price changes and hedge against inflation. Traders and retail investors bet on its ever-increasing price without much grounding in reason or facts behind price escalation. According to them, Bitcoin investments just hold a lot of merits.
The cryptocurrency market is much more stable and mature as the regulatory agencies craft rules specifically for them. As a result, Bitcoin is no more a tool to speculate quick profits but a part of the mainstream economy.
Bitcoin price From 2016
This has been the golden era for Bitcoin and rooted in the origin of other cryptocurrencies. At the end of 2016, Bitcoin was at $900. In 2017, Bitcoin’s price jumped to $1,000, and in the mid-year, it hovered over $2,000, grabbing the attention of every investor. Finally, on December 15, 2017, Bitcoin’s price surged to $19,345.49, making other entities create cryptocurrencies to head on compete with Bitcoin.
2018 and 2019 have been average years for Bitcoin, with inevitable ups and downs in the price owing to some activity bursts. For example, in 2020, Bitcoin started low due to the global pandemic, and in Dec 2020, the price went up to $29,000 with a huge rise of 416%.
By the summer of 2021, prices were down by 50%, hitting $29,795.55 at the lowest on July 19. Autumn saw another bull run in September, with prices scraping $52,693.32, but a significant drawdown took it to $40,709.59 about two weeks later.
Factors Influencing Bitcoin Price
Almost every asset, including fiat currencies, does not have a value when created. The price of any asset is a matter of perceived value and is based on a demand-supply curve. For instance, USD has its value because people believe it is worth a specific amount, and the same goes for Bitcoin. People pay a particular amount to buy Bitcoin if they think its value will increase.
The significant reason behind Bitcoin’s success is its limited supply. The total supply of Bitcoin in circulation will never exceed 21 million. The more Bitcoin in circulation, the higher its price will be due to the difficulty in mining while the demand remains the same.
Bitcoin mining rate is the rate at which Bitcoins are created. There is another concept called Bitcoin halving, i.e., the mining rate splits in half every four years. This will reduce the rate at which Bitcoin is let into circulation. As the supply rate decreases, Bitcoin’s price will be increasing as the supply is not so high to meet the demand. Fall in price happens only when demand reduces as the popularity wanes.
Bitcoin has been the most used crypto asset as a medium of transaction and store of value by crypto enthusiasts and the general public worldwide. The traders, investors, and brokers created various derivates (financial instruments that derive their value from Bitcoin) that influence Bitcoin’s price further. Investment product hype, speculation, irrational exuberance, and investors’ fear or panic have also proven to control Bitcoin’s price.
Do Altcoins impact Bitcoin’s price?
Of course, they do. Recently, the digital world has experienced the advent of several cryptocurrencies that have been accepted by regulators, merchants, and institutors as modes of payment. This elicited the mindset that Bitcoin has alternatives when it comes to the store of value and medium of exchange. Even still believe that altcoins will perform better than Bitcoin in a few years, making market sentiments go against Bitcoin, adversely affecting Bitcoin’s price.
Is Bitcoin Mining still profitable?
Mining is the only way to earn crypto assets without spending a penny. Bitcoins are offered as rewards for completing blocks of verified transactions by validators, then added to the Bitcoin blockchain. Though mining seemed easy back in those days, with increased network congestion and utility of Bitcoin, the miners required a lot of time and processing power to carry out mining. Miners have to solve complex hashing puzzles to be chosen as the subsequent validators. In addition, miners require either an application-specific integrated circuit (ASIC) or GPU to set up a mining rig.
Mining difficulty is not the same for every miner. It changes with the processing power and available energy resources. Currently, the average time to find a block is 10 minutes. Considering mining’s huge impact on the environment, numerous alternative DeFi protocols let anyone earn from crypto.