Bitcoin Crash

The cryptocurrency market is characterized by high volatility that results in booms and busts. Since the introduction of cryptocurrencies, we have seen plenty of swings. The first of these booms was witnessed when Bitcoin rose from as low as $0.003 in 2009 to about $150 by 2013. Soon after, the cryptocurrency fell 60% and rebounded to $1,150. However, it crashed and lost 85% to $175 by 2015. The biggest boom happened in 2017, when the price skyrocketed to over $20,000. The cycle of booms and busts continued with the cryptocurrency losing 85% of its value to $3,122 by the end of 2018.

This year, Bitcoin has risen to over $13,000 and is now hovering around $10,000. Having seen over 400% Bitcoin price increase in less than six months, many people are wondering — will Bitcoin drop again? And if it will — when will it crash? On the other side, others are wondering — will Bitcoin rise again

The Rise of Bitcoin

If you had bought $100 worth of Bitcoins at 30 cents per Bitcoin in 2011, your coins would be worth $3,333,333 today. That’s just an estimate how much Bitcoin has risen over the years. Let’s explore the cryptocurrency’s journey to the top.

Bitcoin rise

Currently, Bitcoin is the most popular and the most dominant cryptocurrency with a market share of over 64 %. However, this was not always the case. Back in 2009 when Bitcoin was launched by its creator, Satoshi Nakamoto, the cryptocurrency was worth less than a cent. Even in 2010, when the concept of Bitcoin went viral, the unaware public still saw it as rubbish. The coin only gained significant value in 2011 when its price rose to above a dollar. For the next years, Bitcoin traded between $ and $30.

The big ride came in 2013 when the price broke the $100 mark. While it kept on fluctuating throughout the year, it rose up to a new high of $1,147 in December. By that time, Bitcoin and cryptocurrencies had gained more popularity, and you could spend them at many companies such as Microsoft and Dell. In the following three years, the coin’s value fluctuated between $300 and $1,200.

However, the rollercoaster came in 2017 when Bitcoin’s value rose by a dazzling 1,950% — rising from $970 to $19700 in the space of a year. On November 28, 2017, the coin crossed $10,000. At that point most people wondered — will Bitcoin keep going up? It didn’t take them long to get the answer — the price kept surging in December, rising to over $19,780.

Why Bitcoin Went Up

This huge Bitcoin price rise was caused by the increased popularity that was driven by the media. Other factors such as Japan’s legalization of BTC as an official payment method, increased acceptance by countries and authorities, adoption by big companies, and the introduction of SegWit, also contributed to the surge in BTC prices.

The Fall of Bitcoin

You don’t need to explore far to see how markets can quickly turn against the tide. For instance, after reaching its all-time high at the end of 2017, Bitcoin quickly tumbled from $19,000 to $6,000 in January 2018. This led a lot of people and analysts to wonder — will Bitcoin crash?

Over the years, Bitcoin has experienced many price swings. And in each case, many people would declare the fall the beginning of the end of Bitcoin. The first bust was experienced in 2011 after the peak of the first Bitcoin. The price went from $32 to $2 by November 2011, losing over 90 percent of its value. The price did not return to that price until 2013 when it went to a new high of $266. This gave way to the second major crash, with the coin dropping to $45 within days — a decline of 83%.

However, the crash that began in November 2013 is arguably the most famous in its history. Towards the end of the year, the price of Bitcoin was nearing $1,200, but reversed and started a bear run. In fact, on November 19, 2013 the price went from $755 to $378 in a single day. Why did Bitcoin crash? Well, there were many factors that played a role, but the major reason was China’s decision that Bitcoin was not a currency, and that it would begin to impose restrictions. While there were a few rebounds along the way, the bear market continued throughout 2014, bottoming out at around $177 in January 2015.

The latest slump in the series of Bitcoin crashes is the one that happened after Bitcoin had reached its all-time high in December 2017. This was also the year that BTC started to lose its dominance. At the beginning of the year, BTC’s dominance was about 85%, but by June 2017, its dominance stood at 38% with Ethereum (30%) having taken a significant chunk of its market share. But despite losing its dominance, it went on to reach an all-time high of over $20,000 before embarking on a strong bear run in 2018. By December 15, Bitcoin price had tumbled by more than 85% bottoming out at $3,122. This also had catastrophic consequences on other cryptocurrencies with many of them rendered worthless.

Bitcoins Evolution

Bitcoin, cryptocurrencies, and blockchain are an interesting technology, and their evolution has been fascinating. Ever since its inception, BTC has always been a highly controversial concept. In the early days, it had a bad reputation in the mainstream. But the once seen as a currency for nerds, drug dealers, and libertarians is today drawing millions of dollars from hedge funds. So, how did it shift to become a globally accepted concept?

Early Days

On October 31, 2008, an anonymous entity published a nine-page white paper titled “Bitcoin — A peer-to-peer electronic cash system.” On January 3, 2009, Satoshi Nakamoto successfully created the founding block of the Bitcoin blockchain, the Genesis Block. The first Bitcoin transaction happened on January 12, 2009, when Nakamoto sent 10 Bitcoins to the late computer scientist, Hal Finney, who was an early contributor to the project. However, the first Bitcoin exchange rate against the dollar was not set until October 5, 2009, when the New Liberty Standard set is as $1 equaled 2300.03 BTC. In 2010, about a million Bitcoins were mined, and the first transaction of BTC for physical goods happened on May 22, 2010, when Laszlo Hanyecz bought two pizzas for 10,000 BTC.

The Beginning of BTC Volatility

Bitcoin value hit $1 in 2011, marking the start of a tumultuous period for the cryptocurrency as its price skyrocketed to $31.91. This was the year that Bitcoin volatility and corrections were first experienced. In 2012, Bitcoin adoption increased as a number of platforms such as WikiLeaks and WordPress started accepting Bitcoins for payment.

First Halving & Silk Road

The first halving of Bitcoin rewards occurred on November 28, 2012, reducing block reward from 50 to 25 BTC after 210,000 blocks were mined. The price of Bitcoin went past the $200 mark or the first time in 2013 but dropped drastically before the fifth anniversary of the Bitcoin whitepaper after the famous dark web site, Silk Road was taken down and 26,000 BTC seized.

Second halving, BCH fork, & the big bull run

The second Bitcoin halving occurred on July 9, 2016, with the mining reward reducing to 12.5 BTC from 25 BTC. What followed in 2017 was the start of the biggest bull run in BTC history. On January 2, 2017, the coin breached the $1,000 mark and more people, media, and experts started talking about it. On August 1, 2017, a disagreement among the Bitcoin community members led to a hard fork from the original Bitcoin blockchain, giving birth to Bitcoin Cash. Bitcoin continued to surge and went on a mind-bending bull run taking its price to over $20,000.

Bitcoin Risks

While Bitcoin is an exciting technology, it’s not without risks. In fact, we have already seen its biggest risk — price volatility. In no particular order, here are the main risks associated with Bitcoin.

• Price volatility

The price of Bitcoin keeps fluctuating and can change a lot in value and in a very short time. In fact, we’ve seen instances when Bitcoin has lost half its value in just a day. This high volatility means that you could incur a massive loss in case Bitcoin goes down.

• Cybertheft and security

There have been numerous cases of hacking of exchanges such as Mt. Gox, and recently, Binance. Other than losing your Bitcoins, such attacks often have a negative effect on the price of BTC, and can easily lead to a Bitcoin crash. Your Bitcoins could also be stolen from your digital wallet if an attacker gains access to your private secret key.

• Lack of consumer protection

Bitcoins are digitally mined, exchanged, and stored. Without the blockchain, they are worth nothing. And unlike other forms of currency, Bitcoin is not backed by any collateral or entity. This means there’s no consumer protection, and hence, investors are vulnerable to fraud, cyberattacks, and system failure.

• Technology risks

Technology develops fast and uncontrollably. Despite its popularity, Bitcoin also faces a real technological risk in the form of competition from other more advanced cryptocurrencies. For instance, in 2017, BTC lost its market share from 85% to 38% due to the growth of other cryptocurrencies such as Ethereum.

• Regulation

Regulation has been a contentious issue in cryptocurrencies because the currencies operate in a decentralized platform. Therefore, the absence of a unified cryptocurrency regulation only increases the uncertainty factor surrounding the future of crypto. Government agencies are wary of the use of Bitcoin for speculation and illegal financial transactions, and some governments have actually gone on to ban the use or trade of cryptocurrencies such as China.

Conclusion

Will Bitcoin crash again? What is the future of Bitcoin?

Well, at this point you’ve already seen how volatile the price of cryptocurrencies can be. This makes it extremely hard to predict if Bitcoin will go down or up. Your best bet is to consider the opinions of expert economists and other professionals in the field. While different experts and Bitcoin enthusiasts seem to have different opinions on where Bitcoin is headed as well as the future of Bitcoin, most of them agree that the question should not be “will Bitcoin drop?” but rather “when is Bitcoin going to crash and to what extent?”

So, when will Bitcoin drop? Will BTC crash further in 2022, or 2023?

No one knows when Bitcoin will go down again. What most experts agree is that at some point, Bitcoin has to crash. And going by its history, it’s highly likely that we will continue to witness these booms and busts. Whether it’s when it hits another all-time high or after a parabolic rise — no one can be 100% sure. It’s all mostly a case of educated speculation.