Since its debut in 2009, and up til the present time, Bitcoin has seen huge ups and downs in terms of its valuation. This volatility has seen its value drop by 64.5% since December 2017 with an overall market capitalisation now standing at $338 billion.
While this may make for a lot of Internet memes about the uncertainty of the cryptocurrency, it is worth remembering that any investment instrument and cryptocurrency faces similar changes in its price, depending on market demand and other conditions.
Other factors contributing to the decline of the cryptocurrency is overseas regulators who are cracking down on its use, particularly on the anonymity associated with its user base. Here is a look at the history of Bitcoin price crashes over the years, beginning in 2011 and going on till as recently as 2017. It is helpful to remember that it is worth investing in the market when prices are low, but always keep in mind the risks associated with any investment before you make the plunge.
The Bitcoin bubble burst of June 2011
In the early days of the Bitcoin, only the bravest investors dared to foray into the obscure world of cryptocurrency. As these intrepid investors realised, all was not as rosy as they had hoped. The price of the Bitcoin rose from $0.95 in early 2011 and reached a peak of $32 around 8 to 10 June 2011. By the 12 June 2011, however, the coin fell by about 68% in value. A further drop was seen to $2 in November 2011, contributing to a fall of 94%. This was associated with early volatility so the Bitcoin did see more interest from traders despite this crash.
The fall of January 2012
Bitcoin recovered from its bubble burst of 2011 to end the year at $4.50. In the beginning of 2012, the coin further increased in value to $7.20. An unexpected crash then occurred around 16 to 17 January, 2012 when the value fell by 36% to $4.60. While the coin did recover sufficiently to $6.25, it continued to flounder in the market for the next six months. This was a pretty scary proposition for early investors who had seen a high of $32 in the previous year.
The decline of August 2012
Bitcoin recovered pretty well between July and August 2012 to reach a high of $15.25. This happy trend was soon cut short by a fall around August 18 2012 by 51% to reach $10.50, and then fall further to $7.50 in the same month. The cryptocurrency stayed below the $15 mark for the remainder of that year.
The dip of March 2013
Early 2013 was a good period for Bitcoin investors. The cryptocurrency saw a rise in its valuation to about $49 by early March 2013. Then, around March 11, 2013, a bug in the Bitcoin software caused the price to dip to $36.50, which was a fall of about 33%. This bug was corrected very soon and the value of the coin recovered quite quickly, allowing it to go as high as $90 by the end of March.
The crash of April 2013
What goes up, must come down, which proved true for the Bitcoin’s upward trajectory in 2013. While the price did increase as far as a whopping $266 in April 2013, it also fell sharply in the same month by about 71% to a value of $67. Experts have since attributed this fall to investor enthusiasm through media coverage as well as a brief outage at the Mt. Gox exchange.
The meltdown of November 2013
The price of Bitcoin remained at around $120 for the rest of the year and then surged again in November to reach a peak value of $1,150 towards the end of the month. This was clearly because of the rush of first-time investors who were attracted towards the new cryptocurrency. By about mid December of 2013, another huge meltdown occurred. The coin dropped in value to $500. It remained below $1,000 for the next couple of years.
The hacking of 2014
Despite its slow recovery, Bitcoin did surge to about $867 in early 2014. In February, however, the Mt. Gox exchange – which was the most popular at the time for the purchase and sale of bitcoin – revealed that it had been invaded by hackers. The hackers made off with about 850,000 coins raising fears regarding the security of the cryptocurrency. The coin fell in value by 49% to $439, as a result, keeping its value low for the next three years.
The lurch of July 2017
After a slow yet steady journey back into the good books of traders, Bitcoin recovered impressively in 2017 to reach a high of $1,000 in January and then surge further to $3,000 in July 2017. At around this time, the developers of the coin seemed to conflict on the way forward for its update, as the underlying code seemed to contribute to a slower development compared to its Litecoin and Ethereum rivals. Rumours came about that the coin would be split into two versions, which did not go well with investor appetites. The market value of Bitcoin fell by about 36% to $1,869 as a result around mid July. In August, Bitcoin Cash, the other version of the coin, made its debut but did not harm the coin as much as investors had feared it would.
The plummet of September 2017
Bitcoin saw happy days again with a rise in its value to as high as $5,000 at the start of September 2017. Then, another set of dire circumstances saw rumours of the Chinese government threatening to crack down on cryptocurrency. This led to BTCChina, one of the most popular Bitcoin exchanges, to declare that it would cease trading by September 20. This caused a spectacular plunge in the value of Bitcoin by 37% in mid September. The price did recover somewhat to $4,000 towards the end of September. The price further improved to $20,000 by January 2018.
While the early fears of Bitcoin investors were dispelled over the years to make way for more impressive valuations, it remains to be seen if Bitcoin will be able to overcome regulatory hurdles and become a cryptocurrency that will gain mainstream acceptance.
Although Bitcoin has experience huge crashes. The days of seeing these have not come to an end yet. There are many hurdles the technology faces before it becomes mainstream (or atleast paves the way for others to become mainstream). Meanwhile investors are taking opportunites to make money- even in bear markets. The question is, where do you sit?