Germany. Bitcoin is a digital currency that has fluctuated greatly over the years but has recently risen in value. Bitcoin is currently a popular form of investment with an increase in value of close to 30,000 percent. Most investors use the tried and true strategy of buying bitcoins when the price is in a downtrend and selling them when bitcoin reaches a certain price to reach the profit target.
However, before Bitcoin became a popular investment, it was a nascent cryptocurrency in an entirely new industry. In this blog post, we take a look at the history of Bitcoin and its price fluctuations. We also get into the factors that affect the price of Bitcoin.
The emergence of bitcoin and its initial price
Bitcoin is a digital asset and payment system invented by Satoshi Nakamoto. Transactions are verified by network nodes through cryptography and recorded in a distributed public ledger called the blockchain. Nakamoto published a white paper in 2009 describing the Bitcoin system. This cryptocurrency is unique in that there are only 21 million of them at any one time. Bitcoins are created as a reward for a process called mining and can be exchanged for other currencies, products, and services. The price of bitcoin has seen many fluctuations since its inception in 2009. In the first few days, bitcoin was only worth a few cents.
Bitcoin price fluctuations over the years
The price of Bitcoin has fluctuated significantly since its inception in 2009. When Bitcoin was first introduced, it was worth less than a cent. Just two years later, the price of bitcoin rose to $1 after making the first real bitcoin transaction in 2010. Lazlo Hanyecz bought two Papa John’s pizzas for 10,000 bitcoins.
In December 2013, the People’s Bank of China banned financial institutions from dealing with bitcoin. After this announcement, the value of bitcoin plummeted and Baidu stopped accepting bitcoins for some services.
In early 2014, the US Internal Revenue Service (IRS) ruled that bitcoin should be treated as property for tax purposes. Then the price of Bitcoin soared to over $500, hitting an all-time high. Shortly thereafter, the bitcoin price dropped to around $360 in November 2014, its lowest level since 2013. A few years later, in 2017, the bitcoin price finally reached its peak at over $4,000.
Bitcoin price movement was sparse for a few years until COVID-19 shut down the economy in 2020. Bitcoin price reached $29,000 in 2020 and in the first few months of 2021 the price nearly doubled. By the end of 2021, Bitcoin crossed its all-time high again, with its price approaching $69,000.
Despite the recent success, bitcoin prices have been very volatile lately. After hitting an all-time high of nearly $69,000, the price of one bitcoin has since fallen sharply, reaching a low of just over $38,900 today.
Many experts remain divided over the future of Bitcoin. While many believe that it will become an increasingly popular global currency, others claim that it is nothing more than a speculative bubble about to burst.
Factors affecting volatility
Many factors can affect the price of bitcoin. Some of the reasons are speculation, media, world events, trader acceptance and rarity. People can buy bitcoins to speculate on their future value. The more people buy bitcoin for speculative purposes, the higher the price will be. When the media reports on bitcoin, the price also goes up, and when governments announce new regulations affecting bitcoin, the price can swing up or down. The more merchants accepting bitcoin, the greater the demand, which pushed the price higher. Finally, the amount of bitcoins available in the market also affects the price. Every 210,000 blocks, is the number of bitcoins generated for each half block. This increasing scarcity of new bitcoin generation directly affects the price.
Invest in Bitcoin – but how?
As you can see, the price of bitcoin is always moving. So if you are thinking of investing in Bitcoin, you should always invest wisely and remember that Bitcoin is a volatile asset at the moment. Never invest more than you can afford to lose to account for these sharp price swings.