Sometimes it’s easy to forget that Bitcoin (BTC) is just a teenager, launched in 2009 by the enigmatic Satoshi Nakamoto.
Since then, Bitcoin has seen a meteoric rise, increasing from fractions of a penny to an all-time high of nearly INR 56,96,689 in November 2021.
The big “B” was the best performing asset class in the decade before the record high. Bitcoin returned more than 230% over the 10-year period ending March 2021. For that reason alone, it is now firmly entrenched in the mainstream.
But Bitcoin’s price journey has been far from smooth. The original digital currency has experienced many violent drops and pumps. Let’s take a closer look at the ups and downs in Bitcoin’s price history.
What price did Bitcoin start at?
Bitcoin was originally worth almost nothing.
The transaction that first gave Bitcoin monetary value was in October 2009, when Finnish computer science student Martti Malmi, known online as Sirius, sold 5,050 coins for around INR 414.65, giving each Bitcoin a value of $0.0009 each.
The exchange took place on PayPal. It may be hard to believe, with so many crypto exchanges dedicated to buying and selling BTC today.
Bitcoin’s Early Years: 2009 to 2012
The growth in BTC adoption in the early years started slowly. If you look at Bitcoin’s price data on Google Finance, it only goes back to November 20, 2015.
The early years were characterized by very little infrastructure, with only a few hobbyists buying and selling BTC.
“There was no action to speak of and no news cycle,” says Alex Preda, professor of professions, markets and technology at King’s Business School in London. “Bitcoin was a fringe phenomenon confined to a subculture of software engineering and not a financial phenomenon.”
The first “real world” transaction took place in May 2010 on a Bitcoin forum.
Posting on the bitcointalk.org forum, Florida native Laszlo Hanyecz asked if someone would order him two pizzas for 10,000 Bitcoins.
After buying two pizzas from Papa John’s worth about INR 3,380, the price of each Bitcoin came to $0.0041. These pizzas are the most expensive ever ordered, worth almost 16 billion INR today, averaging around 1 billion INR per slice.
Hanyecz did the impractical transaction for the sake of it, telling The Sun: “I wanted to do the pizza thing because, to me, it was free pizza. I mean, I coded this thing and mined Bitcoin and I felt like I won internet that day.”
Bitcoin wasn’t even worth a dollar until February 2011.
That’s when the fireworks started. By June 2011, the price of Bitcoin had shot up 30 times, reaching a value of INR 2471. In a hint of what was to come, the rally didn’t last long and Bitcoin fell to INR 411.
Liquidity at the end of 2011 was low, and Bitcoin’s first competitor, Litecoin (LTC), appeared on the crypto scene in October 2011.
The introduction of LTC created some doubt among the community, with a 90% reduction test solution. Despite a slight decline, 2012 was uneventful and BTC ended the year around INR 1070.
Bitcoin attracts investors: 2013 to 2017
Bitcoin’s price trajectory began to change in 2013.
Exchanges, especially Mt. Gox, handled 70% of all Bitcoin transactions by the end of 2014 and began to bring more and more users. Crypto became more accessible as a result.
The price followed the increase in adoption. Opening in 2013 at INR 1,070, BTC skyrocketed to breach INR 82,389 by November 2013.
Its success waned the following year after the Tokyo-based Mt. Gox experienced a security breach with hackers stealing 4,942 million INR from its treasury. Mt. Gox was shut down due to insolvency which caused Bitcoin to fall to around INR 24,710 by the end of the year.
“The Mt. Gox case generally shattered investor confidence in BTC, and it affected crypto sentiment on a much broader scale,” said Alex Faliushin, CEO of crypto lending platform CoinLoan.io.
Between 2015 and 2016, Bitcoin trudged slowly, making the price action relatively muted. It closed 2016 at around INR 82,389.
The following year saw more investors flock to the asset as increasing media coverage began to draw in the average retail customer.
Price barriers were torn apart with ease. BTC broke through INR 82,389 in early January 2017 and INR 1,64,733 in May 2017. BTC then doubled to INR 3,29,464 in August 2017.
Now Bitcoin finally started to win over the doubters. Futures contracts began trading on the CME and many in the market felt that Bitcoin was becoming a true financial asset class.
The “fear of missing out” took hold and more and more people flocked to buy this once-only asset. Bitcoin went up to INR 8,23,537 in November 2021 before almost doubling to almost INR 15,64,720 the following month.
Little did investors know then, but it took almost three years to regain these price levels again.
Bitcoin Recovery: 2018 to 2021
The year 2018 did not slow Bitcoin’s downward trend. BTC’s price collapsed, ending the year below INR 3,29,464. Subsequently, the digital currency ended 2019 at around INR 5,76,472.
With two years of relative inactivity and a consistent downward trend, many wrote off Bitcoin as a fad, having failed to solidify its place in the mainstream market.
Then the Covid-19 pandemic hit, and stock markets fell sharply in mid-March 2020.
Bitcoin was not spared, losing 50% of its value in less than 48 hours to trade below INR 3,29,464. Some assumed that the Covid-inspired doll would be Bitcoin’s final nail in the coffin.
But those skeptics were very wrong. When the Federal Reserve responded to the Covid-19 pandemic by printing money for fiscal stimulus, asset prices across the board rose sharply.
Growth and technology stocks posted explosive gains, but Bitcoin got everyone talking. After halving to less than INR 3,29,464 in March, BTC reached INR 8,23,537 in May 2020.
But it made its real move in the last quarter of 2020. It smashed its all-time high by breaking INR 12,35,197 in November 2020, moved above INR 16,47,196 in December 2020, and ended the year at around INR 23,88,435 with a market capitalization of over INR 44,384 billion.
As retail investors poured into the markets and the Federal Reserve continued to print money, assets continued to inflate. Bitcoin reached INR 32,93,890 a week into 2021, INR 41,17,363 in February 2021 and INR 49,41,104 in March 2021.
After a turbulent couple of weeks in May, it fell below INR 27,99,959 before rising to another record high near INR 56,81,883 in November 2021.
Crypto Winter: 2022
Since November 2021, Bitcoin has struggled with the rest of the market. The only narrative from the days of money printing was over, with economies hit by rampant inflation.
The Fed has been raising interest rates since early 2022, with assets at the far end of the risk spectrum being penalized the most.
Higher interest rates mean higher borrowing costs, less investment and a general reduction in the level of demand in the economy.
Bitcoin has been in free fall since early this year in the middle of the crypto winter.
The most damaging month this year was May, when the collapse of stablecoin TerraUSD triggered a round of contagion in cryptocurrency markets, dragging Bitcoin down from INR 32,10,148 in early May to INR 16,46,230 in mid-June, where it hovers today .
Investors are hoping this downturn is just the latest decline to precede a sharp rally, as history has repeatedly shown for Bitcoin.
Historically, October is known as a “green” month, with an average increase of 26%. If that is the case, we can see the prices heading towards INR 19,75,609.
