, 2 years ago
Many investors probably looked a bit incredulous when Bitcoin revisited the $20,000 mark in December 2020. BTC took a total of 3 years to revisit the old all-time high, and it only took a few days to reach a new all-time high.
Right now, the bitcoin price is in a correction after a fabulous rise to just over $24,000. But how did this happen and why did it take so long? In today's article, we get to the bottom of what led to this price rally in recent weeks.
Bitcoin has a long history of different cycles that the market goes through again and again, marking a new all-time high at their respective peaks. This is followed by a year-long correction that finds its final low on average at around -80% from the previous all-time high.
The first cycle peaked in 2013, when the Bitcoin price reached 1300 US dollars on some trading venues. After that, it first went steeply downward and then only sideways for a long time before BTC finally reached the old record again in 2016.
The following year, 2017, saw the brilliant rally that peaked just below 20,000 US dollars. After that, a long correction followed and so the circle is closed and we are on the threshold of the next bull market, which is expected in 2021.
While these observations are true, it is not necessarily possible to predict from past price action how BTC will behave in future. One observation can be made, however, and that is the growing interest in Bitcoin by institutional investors.
In the meantime, MicroStrategy has invested over 1 billion US dollars in Bitcoin and Elon Musk also flirted with the idea of betting on Bitcoin via Twitter. But a $100 million investment by MassMutual also openly puts up for debate whether an influx of insurers and pension funds will soon bet on BTC.
This buying interest was the driving factor behind the price rally in 2020, and many experts agree that this effect could extend in 2021. Here, everyone also agrees that Bitcoin's mathematically assured scarcity is the driving factor behind the interest. This manifests the idea that Bitcoin is first and foremost a digital store of value that is highly speculative but has better overall properties than gold.
Mar 21, 2023
It's nice for every BTC hodler to see the price go up. But for Bitcoin miners the recent pump - in fact, one of the best weeks in Bitcoin's history - is more than just fun: it's existential. Bear market prices and high electricity costs have hurt them hard in the past 12 months. Finally, the tides seem to be turning.
Mar 20, 2023
Balaji Srinivasan, the former CTO of Coinbase and author of The Network State, has made a bet of 1 BTC and $1 million on whether the US will experience hyperinflation. Only if BTC will reach $1 million by June 17, Balaji will win this outrageous bet. What has he been smoking?
Mar 14, 2023
After a tumultuous weekend, in which the American government had to prevent a bank run on regional banks, markets have had some time to digest the developments, including some new economic data. What to expect - and why the recent pump?
Mar 13, 2023
Bitcoin was born as an idea in 2008 when its whitepaper got published. Only a few months later, on January 3rd, 2009 the so-called Genesis block was mined and the Bitcoin network started working. Only 14 years later the United States and the world are facing a very similar situation to the one we saw between 2007 and 2009. Some banks acted irresponsibly and without a bailout, there might be a contagion effect that kicks in. Many people believed that bailouts are out of the question after the failure of Lehman Brothers.
Sign up to stay informed via our email updates