Good day everyone,
I hope you are all well and having a great day, welcome to CryptoGod-1's blog on all things crypto. Today I am going to look briefly at the history of Bitcoin and its most significant crashes since its inception on the 3rd of January, 2009. Many of those crashes have been in line with bear markets, something we are all too familiar with in 2023.
Bitcoin Inception 2009
Bitcoin was released in early January 2009, but the idea had been around for much longer. There were already a number of digital cash technologies such as ecash protocols of David Chaum and Stefan Brands, while the idea of computational puzzles being solved by cryptographers for rewards was originally put forth by Cynthia Dwork and Moni Naor way back in 1992. Back in 1997 Adam Back developed hashcash, a proof-of-work style scheme for spam control. While none of these quite took off to the levels that Bitcoin has, they can all be attributed to the inception of the most famous digital currency; Bitcoin.
In August 2018 the domain name bitcoin.org was registered, although it is unclear who is behind it. Later that year, on the 31st of October, a link to a paper authored by one Satashi Nakamoto called 'Bitcoin: A Peer-to-Peer Electronic Cash System' was posted to a cryptography mailing list. It detailed the methods of making use of a peer-to-peer network to generate a what it described as "a system for electronic transactions without relying on trust." The following year, on the 3rd of January 2009, the Bitcoin network went live for the first time with Satoshi Nakamoto mining the genesis block of bitcoin (block number 0). This gave a block reward of 50 Bitcoin, and embedded within the genesis block was the text:
"The Times 03/Jan/2009 Chancellor on brink of second bailout for banks"
This was in reference to a headline published by The Times on the 3rd of January 2009, and was in relation to the financial crisis which shook the world markets in 2008. The note has been interpreted as both a timestamp of the genesis date and as a comment on the instability caused by traditional fractional-reserve banking.
2011
In late April 2011 Bitcoin went above the landmark of $1 for the very first time, and from there it rallied up to hit $32 on June 8th, 2011. That joy did not last long however, as over the coming days Bitcoin crashed right back down to a value of just over $0.01.
The major cause for this was attributed to Mt. Gox, a Japanese crypto exchange which was responsible for the majority of Bitcoin trades at the time. It had just seen 850,000 Bitcoin stolen thanks to a security breach on its platform and this raised major concerns over the security of Bitcoin stored within exchanges.
As it took only a couple of days for Bitcoin to crash to near $0.01, it became a large part of Bitcoin's history and a lesson for all involved. The event was followed by a long period of ebbing and flowing before Bitcoin would recover its previous high price of $32 in February 2013 before hitting new high prices.
This means the bear market at the time, and the time it took for Bitcoin to retest its previous high, was: 20 months (June 2011–February 2013)
2015
In mid April 2013 Bitcoin reached a new high of $100 and from there it surged upwards and briefly hit $1,000 in November 2013. This was the first time in its history that Bitcoin had hit the $1,000 price point but soon afterwards it began to tumble downwards, going as low as $700 a month later.
This was attributed to the Chinese central bank cracking down on Bitcoin in late 2013, prohibiting local financial institutions from handling BTC transactions. It continued to crash downwards over the following two years, hitting a low of around $360 in April 2014 and about $170 in January 2015.
The crypto winter of 2014 became known for the Mt. Gox hack and major financial institution raising concerns over Bitcoin, including the U.S. Commodity Futures Trading Commission which had claimed that there was “Bitcoin price manipulation” in late 2014.
The sentiment surrounding Bitcoin remained negative until August 2015 when a long term reversal took place. Amid the strong bullish market, Bitcoin returned returned to the $1,000 price mark in January 2017. So far this has been marked as the longest all-time high price recovery period in the history of Bitcoin.
This means the bear market at the time, and the time it took for Bitcoin to retest its previous high, was: 37 months (November 2013–January 2017)
2017
After its price recovery in January 2017 the price of Bitcoin continued to climb, reach as high as $20,000 by the end of 2017. However, similar to its previous peak of $1,000, the triumph of $20,000 was short-lived. It dropped and lost more than 60% of its value in a number of months.
Thanks to the drop, 2018 became known as “crypto winter” as the Bitcoin market continued shrinking and Bitcoin reaching a low of $3,200 in December of 2018. The period became associated with security issues on Coincheck, which resulted in a hack and loss of about $530 million worth of assets of the NEM cryptocurrency in January 2018. From there tech giants such as Facebook and Google banned ads for initial coin offerings and token sales on their platforms in mid 2018.
Regulation efforts also contributed to the bear market, as global and localised impacts took place. The U.S. Securities and Exchange Commission rejected applications for a variety of different Bitcoin exchange-traded funds.
This means the bear market at the time, and the time it took for Bitcoin to retest its previous high, was: 36 months (December 2017–December 2020)
2021
The market remained bearish until 2020, when Bitcoin rose above $20,000 once more and push on up towards a new all time high of around $63,000 in April 2021. It was one of the biggest years for Bitcoin, with the overall cryptocurrency market going above $1 Trillion for the first time.
The high times did not last long however, and a drawback occurred which saw Bitcoin drop to as low as $29,000 in three months. This mini bear market was a result of a growing media narrative suggesting that Bitcoin mining was directly related to environmental issues such as global warming.
The FUD around Bitcoin was exacerbated even further with Elon Musk’s electric car firm Tesla dropped Bitcoin as a form of payment in May 2021, when he cited environmental, social and corporate governance concerns. However, three months later Musk admitted that at least 50% of Bitcoin mining was done via renewable sources.
The bear market did not last long even though China decided to crackdown on Bitcoin mining, and by the end of July the bullish trend of Bitcoin had returned. This saw the price of Bitcoin eventually surge towards its most recent all time high price of around $68,000 in December 2021.
This means the bear market at the time, and the time it took for Bitcoin to retest its previous high, was: 6 months (April 2021–October 2021)
2022
In late 2021 Bitcoin failed to break the $70,000 and began to drop, seeing it slip into a bear market since November of that year. One of the biggest historical crashes happened throughout 2022 as in June the cryptocurrency went below $20,000 for the first time since 2020. This caused extreme fear in the market.
The crisis of the algorithmic stablecoins, namely TerraUSD Classic (USTC), which was designed to support a stable 1:1 pegging alongside the U.S. dollar via blockchain algorithms was one of the first major contributors to the ongoing bear market when it lost its peg in May 2022. Following on from that the domino effect saw the rest of the crypto market due to massive liquidations, with the likes of Celsius also going under.
Towards the end of 2022 the fear in the market got even worse as FTX collapsed, seeing Billions of dollars in user assets getting held up and potentially lost indefinitely, while BlockFi was just another one of the major crypto services to go under.
This means the bear market at the time, and the time it took for Bitcoin to retest its previous high, was:to be determined
So what can we expect ahead in 2023?
So far 2023 has seen a mini revival of Bitcoin, with the prices beginning to rise in January and reaching a high of $24,800 in mid February 2023 before stumbling back down to $20,200 in early March. However, with news of U.S. banks collapsing such as Silicon Valley Bank, and the U.S. basically bailing them out, the value of Bitcoin has began to rise once again. At the time of writing the price is hovering around the $24,200 mark and look set to outdo its yearly high set back in February. Whether or not this trend will continue is unknown, but there is sentiment that the market is growing due to the realisation that Bitcoin may indeed be the only true viable option compared to big banks.
With so many institution's collapsing in crypto and now in the mainstream financial world, with SIlvargate (albeit a bank linked with crypto) being just another one of them, it seems unlikely we are out of the worst days just yet. Any growth can be seen as good for the space though and hopefully in time it will grow further and start pulling us clear of this bear market. For now, I think most people have the same feeling as this tweet below.
Have a great day.
Peace. CryptoGod-1.
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