Bitcoin is one of the most popular and lucrative investments in the world today. Its price has been on an incredible growth trajectory since its emergence in 2009. But due to its volatile nature, it has also witnessed some major ups and downs over the past decade. Understanding these rises and falls of Bitcoin can be crucial for any investor looking to capitalize on its potential. In this article, we’ll explore the biggest rises and falls of Bitcoin, explaining what caused these extreme fluctuations and what impact they had.
The Biggest Rise: The First Bull Run (2010 – 2017)
The first recorded rise of Bitcoin came in 2010. This was due to a single bitcoin being valued at around $0.008, reportedly making an individual a millionaire who bought thousands of bitcoins for around $27. The price then stayed relatively low until the beginning of 2013, when it suddenly skyrocketed to reach $266. This growth was kickstarted by the Bitcoin Foundation which was formed in 2012 to develop and promote the cryptocurrency.
The real surge in price came in 2017. It was during this period that Bitcoin famously rose to reach a market value of over $19,000 per unit. This rapid price appreciation was due to a number of factors. Firstly, there was a huge increase in investor interest, with financial services giants like Goldman Sachs and JPMorgan getting into the fray. At the same time, the number of businesses accepting bitcoin as payment had been steadily growing since 2013, and blockchain-based companies had been steadily raking in several million dollars worth of investments.
The surge was also propelled by the perception that Bitcoin was a safe haven asset – a safe bet to invest in amidst turbulent global financial markets. As many invested in Bitcoin to hedge against potential losses, the price continued to soar, with some analysts expecting it to hit $100,000 in 2020.
The Biggest Fall: The Risks of 2018 and Beyond
Unfortunately, Bitcoin quickly fell back from its meteoric rise almost as rapidly as it shot up. In late 2018 and early 2019, the price of Bitcoin fell from over $19,000 per unit to almost $3,500. This dramatic fall in prices was predominantly attributed to the overly optimistic expectations of the crypto market. The market was infused with a lot of money, which was looking for new avenues of investment. A majority of investors lacked in-depth knowledge of cryptoassets, resulting in a series of market-wide corrections.
There were also reports of fraud and crime-related activities occurring on the blockchain network. This too made investors wary of investing in Bitcoin. It was also reported that some exchanges were hacking victim which further dented investor confidence in the cryptocurrency.
Apart from these factors, governments and central banks were also increasingly looking to regulate cryptocurrencies, which was an additional deterrent to investors. Governments had started to question the legitimacy of the cryptocurrency, which further dampened the investment enthusiasm.
Ultimately, the fall in prices was drastic and swift, due to the uncritical use of terms such as “bubble” and “fraud”. This caused panic selling which drove the prices down.
What This Means for Investors
The rises and falls of Bitcoin have certainly been very dramatic, but they point to one thing – making money in the cryptocurrency market is not easy. Investors must have a good understanding of the market and have the ability to navigate the risks associated with cryptoassets.
The most important thing for any investor looking to capitalize on the potential of Bitcoin is to understand the underlying technology, to track its price movements, and to form an investment strategy that takes into account the risks involved.
It should also be remembered that the price fluctuations of Bitcoin will continue to be volatile. As such, investors should ensure that they employ good risk-management techniques, such as setting take-profit and stop-loss orders, and diversifying their investments over a range of assets.
The last decade has seen a lot of volatility in the price of Bitcoin, with some major rises and falls. It was the surge in investor interest and the perception of the cryptocurrency being a safe haven asset that fuelled the first Bull Run in 2017. The biggest fall came in 2018 and 2019, primarily due to the over-optimism of the crypto market, reports of fraudulent activities, and increased regulation by governments and central banks.
The important thing for any investor looking to gain from Bitcoin is to build a deep understanding of the technology, track the prices, and employ effective risk management strategies to mitigate the risks associated with Bitcoin investments.
