Bitcoin bull markets: four different stories of Bitcoin highs

Buying bitcoin based on past market action is tricky when the data set is so small, but there’s still plenty to be learned from history. By Dominik Stroukal

Bitcoin is teasing us with a new all-time high (ATH) and our expectations this time around are huge. Many of us have experienced one or more previous bull runs and we know how crazy Bitcoin can be. Nothing seems impossible as we sit hypnotized by tickers, charts and candlesticks, while those enjoying their first bull run are experiencing the infectious euphoria and hype first-hand. Bitcoins bull runs follow no standard archetype, so let’s look back at some fond memories and the different beasts we’ve met along the way.

Each of the four big bull runs Bitcoin has experienced were completely different. As if penned by different writers, each time saw it climb to different heights, followed by different falls. Do you remember what it was like in 2011? Or 2013? Or did you experience 2017 and the uncertainty that followed? Whether you were there or not, we’ll jump back in time and compare the four manias that defined what Bitcoin is today.

2011 — Pioneers harness the bulls

I have to admit, the bull run in 2011 missed me. As a student of economics and a fan of the Austrian school, I knew about Bitcoin and studied alternative money, but didn’t think it made sense. What a fool I was. I only jumped on the crypto train the following year, so I remember 2011 only indirectly and from a distance.

It was the year that probably defined Bitcoin the most. Just consider, on April 18, 2011, the first altcoin, Namecoin, was created. Litecoin rolled out half a year later. Bitcoin had 100 percent market capitalization of cryptocurrencies and, with the advent of altcoins, it began to decline, but only slightly.

At the beginning of the year, Bitcoin’s market capitalization exceeded $1 million, and soon the price per coin jumped to one dollar. Parity with the dollar is only a symbolic thing, but it worked like magic. Media started to talk and write about it. C’mon, it’s more expensive than the US dollar!

And it went on. Bitcoin rescued WikiLeaks, Mark Karpelès bought Mt. Gox., and the first places appeared where you could physically pay with Bitcoin. Together with this — and because of it — the price rose to exactly $ 31.91. From this high point, things went downhill, and it took a year and a half for Bitcoin to return to this price.

The crash had come. During the four days between 8 and 12 June 2011, the price fell by 70%. It was the fastest slump in Bitcoin’s history and it continued to sink even lower, first under ten and then under five dollars. But Bitcoin never again saw parity with the dollar.

It was a ride. With a market capitalization of only a couple million, Bitcoin’s price was easy to kick up as well as down. It’s hard to say when the bull run started, but Bitcoin had jumped more than 100 times since the beginning of the year. If you were to try and find a bottom, and the beginning of it all, you’ll probably settle for when the price was first published in the media, in October 2009, when the New Liberty standard listed a price of 1309.03 BTC for 1 USD. With this in mind, Bitcoin skyrocketed 41,770 times in the first bull run.

But it was a difficult time. If you wanted to join the bull run, there weren’t many opportunities to buy Bitcoin. Exchanges were often unavailable, sometimes you lost your money, sometimes someone stole it and, in the end, you didn’t have a Trezor to store your precious bitcoins safely. A lot of people made a lot of money in the first bull run, but in the end not everyone managed to carry their gains into the future. It was hard work, but cypherpunks pushed onward in pioneering the new economy.

2013 — Double bubble, toil and trouble

I remember standing in front of roughly 120 students in November 2013 at the University of Economics in Prague. In the middle of the second bull run. Slush showed a prototype of Trezor and I longed to have one. I was holding some bitcoins, but as the price went up, I started to sweat. Can I protect them? Trezor came as a lifeline for us hodlers, who wanted to go through another bull run without damage. But not in this bullrun, unfortunately.

It was still a bad time. We sent money on a strange trip to Japan using Mt. Gox and hoped we could buy bitcoins in at least two weeks. In the meantime, however, the price tripled. We tore our hair.

The last day of February 2013 started with a new Bitcoin ATH and it was just the beginning. Remember 2011, when the market capitalization exceeded one million dollars? Two years later, it was one billion dollars. Exactly one month after the new ATH. Four days later, we jumped another $100.

The year 2013 saw two bull runs. In the first half of the year, we jumped above $ 150 and then fell below $70. In the second, it shot over $1100, but that the time was bad is best shown by the fact that to this day almost nobody wants to show much data on prices before 2014. It all happened on Mt. Gox, where no one knows what really went on. Some transactions were probably fake, but there were so many theories. You don’t have to believe them, but it was still awful that we had to trust the price of a single exchange. Nowadays, it would be hopefully much more transparent.

The crash came. From a peak at the end of 2013, we fell and continued to fall below $ 200 at the beginning of 2015. The drop — more than 80 percent — was brutal. We were bleeding and so was Bitcoin. But we knew it was a problem and it clearly showed us what needed to change. Soon after, other exchanges came, new ways of buying, including ATMs, which spread massively, and a long period of the price remaining low brought a much-needed rest from speculation. We focused on improving the infrastructure. Trezor arrived, alongside bitcoin ATMs and the first clarifications on regulatory issues. Bitcoin was breaking into the mainstream, it was talked about everywhere, but the price didn’t really reflect it. We were preparing ourselves for yet another bull run.

2017 — The tide is loosed

It came very soon. After rebounding from the bottom, 2016 was positive and price growth was modest but stable. Everything was being prepared for 2017. After the New Year’s Eve celebrations, we woke up with a hangover to $ 1,000. Growth accelerated and, in the second half of the year, went completely crazy again.

The price resisted for a long time, but in mid-October Bitcoin crossed $ 5,000. By November, it was 6,000 and showed no intent of slowing down. At the end of November we were at $10,000. Twice up in a month and a half, it attracted more and more people who were still waiting to jump in. FOMO was in full swing. The beginning of December was crazy: on the 5th, we touched $12,000, three days later $18,000. A correction to $13,500 saw Bitcoin’s presence in the media began to dwindle but, fortunately, it took another breath. The week before Christmas 2017, we touched the $19,500 high, even more on some exchanges.

Exactly a year later, however, we were again more than 80% lower. This time it was $ 3200, which is a huge drop, but in the context of the bull run from 2013, we were still at 2.5 times the former ATH.

The bull run in 2017 was again completely different from the previous one. Between January 7, 2017 and the same day a year later, the market capitalization of the entire cryptocurrency market grew from $ 17 billion to $ 830 billion. Bitcoin grew 20x, while other cryptocurrencies saw their capitulation grow by 50x.

At the beginning of 2017, Bitcoin accounted for over 85% of the cryptocurrency market cap; a year later it was only 33%. It was the Altcoin Age. The 2017 bull run favored alternative cryptocurrencies, which tended to shoot up much faster and higher than Bitcoin. While pioneers reaped well-deserved Bitcoin fruit in 2011, and 2013 Bitcoin began to attract the general public for the first time, in 2017 the public jumped into altcoins. ICOs for anything, blockchain projects, forks, teams of good-looking developers and advisors of new coins that were guaranteed to save the world. I remember being asked at a conference in January 2018, “How many ICOs have you created?”.

In retrospect, it seems clear to us that this was not healthy, but we were absorbed in the growth and nothing seemed impossible. It was also thanks to the cryptocurrency infrastructure, which was miles better than 2013. We had hardware wallets that could protect our “portfolios”. We had a number of exchanges with competitive offers that started to prioritize customer needs. Conferences, web magazines, social media groups, TV shows were all there, showing that Bitcoin had become properly mainstream.

The year 2017 attracted the general public to cryptocurrencies, but it was marked by a bull run that exposed Bitcoin to enormous competitive pressure from altcoins.It gradually returned and doubled its dominance over the market, but it remains very far from where it had been at the beginning of 2017.

2020 — Institutions turn bullish

The story of the current bull run is still being written. On some exchanges, we have already broken the previous high. Again, however, it seems everything is different, and drawing a comparison with previous bull runs is not easy.

We welcomed the year 2020 at $7,000 and went over $10,000 by mid-February. Everything looked good, people were talking about Bitcoin because of the upcoming halving, and general growth of economies all around the world was helping charts climb. Then came the first global crisis Bitcoin had ever experienced.

Sure, Bitcoin went through its own internal crises, but this time it was experiencing its first major external shock. When economies began to close, Bitcoin wrote off 50% of its market cap. More than stocks, gold and other investments.

It makes sense, as people were frightened by the crisis, so they started selling and watching what would happen. Is Bitcoin Digital Gold? A safe haven? Fans hoped so, but investors followed the textbook and sold.

Then the slump stopped, and the markets began to rise, assisted by massive state and central bank intervention. And so did Bitcoin. It successfully survived its first crisis, and began to attract more and more people. In July, we were back over $10,000 and in November $ 19,000.

Not only did Bitcoin (and other cryptocurrencies) survive their first recession. More and more we have begun to read about big players who, perhaps thanks to the rebound, started buying Bitcoin and buying in bulk. Why shouldn’t a large fund have some bitcoins? Or a giant IT company, or a bank? It’s no longer a curiosity among a few fanatics, and company directors are having to ask themselves — why don’t we have any Bitcoins yet? Are we making a mistake?

Will they regret their decision? Some undoubtedly will. Some will make a lot of money, some will lose. Bitcoin bull runs do not come freely. In all previous bull runs, the price fell by more than 80%. Can they handle it? Will their investment soften the fall?

When does the charge come?

Bitcoin is specific in its nature. It’s a huge ride up and down. To outsiders, it may from a distance seem like a strange game of speculators, who push the price up and then down. But those of us who have been with Bitcoin long enough can testify that this is not the case. It is a story of slow and careful innovation of something that more and more people believe in, which is why the current bull run isn’t the last.

Yes, Bitcoin still sees huge growth and massive declines but these take on different forms, changing each time round since the first bull run in 2011. It is now easy to protect and safer to buy Bitcoin, there is competition and institutional investment, and regulators are working to better understand it. The latter still needs a little refinement but there are some signs of change, at least.

When the next bull run comes a few years from now, one thing is for sure: Bitcoin will again overcome its all-time high. And then probably correct like a rock. But by then it will be a bit more usable, more widespread, and met with less skepticism, writing yet another exciting new chapter. Bitcoin is a story of progress, a dramatic uptrend that is writing modern economic history. Whatever the outcome of this bullrun, the next won’t be far behind.