Bitcoin moves on the chart in very specific cycles. These are mainly driven by the halving phenomenon – halving the reward for mining BTC blocks approximately every 4 years – but also other events. In this text, I will analyze the history of cryptocurrency’s ups and downs so far.
The Bitcoin cycle, or what exactly?
Investing in BTC is not – despite a certain stereotype – difficult. You just need to know the cycles in which the cryptocurrency price moves.
A single cycle can be divided into the following phases: accumulation (sideways trend), growth (bull market), distribution and finally decline, which starts a bear market. During each of these phases, market dynamics change and experienced investors adapt their strategies accordingly. Halving usually initiates a bull market, while its end is the moment of greatest enthusiasm, which leads to dynamic price increases. Then the market enters a downward phase, which turns into an oyster mushroom. And the whole cycle repeats itself.
I will now try to present the above to you with specific examples.
Rise and fall, i.e. bitcoin in a nutshell
More experienced investors remember the years 2012-2023. In 2013, bitcoin reached a value of over $1,000 for the first time, but it ended in dramatic declines. These were related not only to the overheating of the market, but also to the collapse of the Mt. Gox (the very beginning of 2014). The rate dropped to around USD 200, which shook confidence in the BTC market.
However, Bitcoin rose – the next milestone was 2017, when the rate was around USD 20,000. However, it collapsed again and dropped to just over USD 3,000.
No, it still wasn’t something that was going to destroy cryptocurrency. Although traders could not complain about the lack of emotions. This time, they were provided by the COVID-19 pandemic and the macroeconomic situation. In March 2020, there was a crash: a drop from approximately USD 7,600 to USD 3,700. In the background, however, the valuations of everything fell: including gold. There was “the shortest bear market in the history of the world”. Investors panicked when a near-worldwide lockdown was announced. All in response to the coronavirus pandemic.
Ultimately, however, it turned out that the way the government chose to fight COVID-19 was beneficial for the financial markets. Almost all countries that introduced a lockdown began to provide anti-crisis shields to companies and their citizens. As a result, large amounts of money entered the stock exchanges, which increased the valuation of, among others, cryptocurrencies. 1 BTC cost USD 69,000 at the end of 2021. The decline was triggered only by the Fed’s decision, which announced that it was starting to increase interest rates, i.e. “pump” capital from the markets.
The year 2022, i.e. the bear market, brought further collapses, provoked by the collapse of the Terra ecosystem and the subsequent bankruptcy of the FTX exchange. These events ultimately lowered the price of BTC to levels below $16,000, one of the largest declines in cryptocurrency history.
As you know, today 1 BTC costs over USD 100,000. As you can easily calculate, shopping at such lows – around USD 16,000 – was a great move. It was enough to know the history of bitcoin and know that it would recover after the crash.
Eleventh, don’t get emotional!
But why should investors believe in the success of cryptocurrency after such dramatic events? It is crucial to understand the cyclicality, but also the fundamentals of bitcoin. These will not be shaken by the collapse of a single stock exchange or project. Declines at such moments result only from a change in sentiment – hysteria into which investors fall. You just need to wait out the worst moments and – already during the boom – enjoy the growth.
Moreover, the history of bitcoin shows that despite extreme volatility, this cryptocurrency constantly recovers after each crisis, attracting more and more attention of institutional and retail investors. The key elements remain: understanding cyclicality, fundamental analysis and macroeconomic factors that influence the market.
Lessons from the past and the future of BTC, i.e. where are we now?
Historical analysis shows that despite repeated crashes, bitcoin has the ability to recover. These crises offer lessons for investors.
We are currently in a very interesting place on the chart. Bitcoin has broken through an important psychological barrier: USD 100,000. During a bull market, December is historically a good month for Bitcoin, so it cannot be ruled out that the cryptocurrency will draw further ATHs on the chart in the near future. In January, Donald Trump will be sworn in as the US president, which may add fuel to the growth. His first decisions as crypto-president may also fuel growth.
As Ryan Lee, Chief Analyst at Bitget Research, says:
Bitcoin reaching $100,000 marks a key milestone, highlighting its growing popularity and perceived value. Analysts are now focusing on the next potential resistance levels, targeting $150,000 and even $200,000. The market’s measured reaction suggests there may still be room for growth.
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