Bitcoin is poised to end 2021 more than twice as valuable as it was in December 2020, capping a year that saw cryptocurrency explode in mainstream interest and curiosity.
As more everyday investors wonder how cryptocurrency might fit into their portfolio, financial advisors have found themselves incorporating crypto into their guidance. “A lot of people bought cryptocurrency for the first time this year,” says Brittney Castro, a Los Angeles-based certified financial planner with Mint and founder of the media company Financially Wise.
Along with institutional adoption and government regulatory interest, these crypto newcomers are influencing the once-fringe crypto landscape and moving the needle toward mainstream adoption.”Fifty-one percent of Americans who own cryptocurrency bought it in the last 12 months,” says Lisa Lewis, a certified public accountant at TurboTax, citing data from a survey her company did earlier this year.
In most cases, and as many experts recommend, crypto newbies buy Bitcoin or the most popular altcoin (alternative coin), Ethereum. Bitcoin (BTC) reached an all-time high of over $68,000 in November 2021 after starting the year at just under $30,000, and the crypto industry as a whole grew to a total market cap of more than $2 trillion. Meanwhile, Ether (ETH), has shot up from about $737 to around $4,000, depending on the day.
But here’s the thing about crypto: These prices can drop by 15% or more overnight or in a matter of hours. In fact, they commonly do. Volatility is a trademark feature of cryptocurrency, with a few exceptions like stablecoins. That’s why experts recommend investors keep cryptocurrency investments to less than 5% of your total portfolio, and never invest in cryptocurrency at the expense of saving for emergencies and paying down high-interest debt.
As we near the end of this big year for crypto, we spoke to some crypto experts and industry professionals about Bitcoin’s price over the years, and what that might tell us about its future. Here’s a look at Bitcoin’s price history — from its 2009 origins until now.
Bitcoin Price History
Bitcoin has a much more extensive track record compared to other cryptos, though it’s still in its relative infancy compared to the 200+ year history of the U.S. stock market.
Here’s a quick rundown of Bitcoin’s past, which is full of the same ups, downs, and big swings that we saw throughout 2021:
2009: Bitcoin’s Origin
The invention of the Bitcoin currency (BTC) was simultaneous to the invention of Bitcoin as a blockchain, and it was the first of its kind in history.
“The unit of value (BTC) wouldn’t have been possible without blockchain technology, but there was never a Bitcoin blockchain without the currency either,” says Robert Konsdorf, CEO of Facings, a Michigan-based company that creates user-friendly blockchain publishing tools.
Bitcoin’s first price was $0. The founder, known pseudonymously as Satoshi Nakaomoto, famously released the Bitcoin white paper to explain how the new technology would work.
2010: The First ‘Jump’
Bitcoin’s first “big” jump happened in summer 2010. The price rose from a fraction of a cent in the spring to $0.09 by July. Very few people, except for very niche tech experts and finance enthusiasts, knew enough about Bitcoin to buy the currency. By October, 2010 the price was about $0.10.
2011: Bitcoin Breaks $1
Bitcoin broke $1 in April 2011, entering its first mini “bull run.” It rose by roughly 3,000% over the next three months and peaked between $29 and $32 (depending on the source) by June 2011. By November 2011, the price bottomed out again at $2.
The following year was uneventful. Bitcoin didn’t bounce back in 2012, finishing the year between $13 and $14.
2013: Bitcoin Breaks $100, Then $1,000 — Then Falls
Bitcoin began 2013 around $13.28. It rose to the $30 range in the first quarter of the year, then quickly accelerated in the last week of March. By April 1, Bitcoin broke $100. Online forums on Reddit became a hub for curious money enthusiasts and tech professionals wondering why this new asset class — unlinked from any physical commodity — could actually have value.
By November 2013, Bitcoin broke $1,000 — then the price dropped dramatically by December to around $530.
2014 to 2016: Bitcoin Stalls
Despite the volatility, these early rumblings were enough to persuade Nelson Merchan, CEO of the blockchain events firm Light Node Media, to look into crypto. A college student at the time, Merchan first bought Bitcoin when the price was around $600.
“I was a sophomore in college when I stumbled upon a Reddit post in early 2014 talking about this digital currency that had hit $1,000,” Merchan tells NextAdvisor. “I thought, ‘if people are willing to pay $1,000 for the digital currency, there’s clearly something more to this.’”
Merchan proceeded to do more research on Bitcoin, and in particular its unique supply framework: “I found out that there was only going to be 21 million BTC ever in existence. So I was like, ‘OK, if it’s already at $1,000 and there’s only 21 million ever going to be created in the world, that’s going to be huge. We’ve never really seen a currency of any sort have a restricted supply amount,” he says.
However, the next two years required lots of patience, says Merchan. The price of BTC stagnated and wouldn’t hit $1,000 again until 2017. Not sure of what the future would bring, Merchan avoided telling his friends about his mysterious investment.
“People weren’t really that interested in this cryptocurrency thing. And the thing is, when you know crypto, you don’t really want to get people into it. I’ve seen really horrible experiences of people telling others to get in and then losing all their money.”
2017: Bitcoin Breaks $1,000 and Kicks Off a Bull Run
After years of price fluctuations ranging between $100 and $900, Bitcoin finally broke $1,000 again in January 2017. This kicked off a euphoric bull run phase. Prices doubled to $2,000 in mid-May and then skyrocketed to over $19,000 by December.
Merchan says he saw his initial investments (he estimates they were under $15,000) grow to millions, seemingly overnight. The unexpected spike in net worth was an adjustment for Merchan, but he maintained a degree of cautious skepticism on this newfound source of wealth.
“I’m a big believer that if it’s not in cash, you don’t really have that money because in crypto, anything can drop pretty dramatically overnight,” Merchan says. “If you have a million dollars in the bank (in crypto) you’ve got to be very careful because if your monthly expenses continue to grow and the market drops 50%, now you really have to tighten your belt.”
It turns out, Merchan’s long-term mindset would be necessary for Bitcoin’s next phase.
2017 to 2019: More Ups and Downs
Thanks to media coverage and the steep rise in Bitcoin’s price, the crypto industry started to take off. Thousands of altcoins were minted, while international diplomats, governments, mathematicians, economists, tech professionals, and financial experts increasingly discussed cryptocurrency regulation and mainstream adoption.
Bitcoin’s price moved sideways during this time, with a few small spikes. The highest peak was in January 2018, around $17,527. The lowest dip was around $3,236 in December 2018.
“I went from having millions of dollars in crypto, to having a couple of hundred thousand,” Merchan recalls.
At the end of 2019, Bitcoin’s price was about $7,200.
2020: The Coronavirus Pandemic
When the coronavirus pandemic shut down the economy and stirred up fears of inflationary pressure on the U.S. dollar, Bitcoin’s price started to accelerate in its upward climb. By December 2020, Bitcoin’s price had increased by over 300% since January. The year ended at a price of about $29,374 — the highest it had ever been.
2021 to Present:
Though the price of Bitcoin has almost doubled since January 2021, this year was not without Bitcoin’s usual volatility. We saw Bitcoin skyrocket to an all-time high over $64,000 in the first half of 2021, then just as quickly fall back below $30,000. Bitcoin hit another all-time high over $68,000 in November. Many Some experts say the price of Bitcoin will surpass $100,000 — describing it as a matter of when it happens, rather than if.
How High Will Bitcoin Go In the Future?
Conservative predictions of Bitcoin say the cryptocurrency will reach $100,000 by 2023, but more bullish crypto enthusiasts say $250,000 isn’t far from sight. Major financial institutions are also throwing their own predictions into the debate, with JPMorgan predicting a long-term high of $146,000 and Bloomberg predicting it could hit $400,000 by 2022.
Because Bitcoin (and crypto in general) is so new, price predictions are mostly informed speculations. Financial planners therefore recommend only investing in crypto what you could afford to lose. Or, you can simply relax knowing that by investing in mainstream low-cost index funds and ETFs, you could possibly already be investing in crypto, albeit in an indirect way. Several blue-chip companies including Tesla and Square either hold crypto in their portfolios or plan to incorporate blockchain technology into their business models. For example, the e-signature company DocuSign has experimented with Ethereum integration for making advanced smart contracts.
What Drives Bitcoin’s Price?
Bitcoin is valuable thanks to its limited supply steadily increasing demand by a greater number of investors. It has also been described by some as an inflation hedge.
People across many different industries also believe blockchain (the tech upon which all crypto is minted) could be a game-changer and provide transparency across various industries.
“[Bitcoin has] captured the imagination of investors,” says Dave Abner, global head of business development at popular crypto exchange Gemini. With a current market cap of about $900 billion, the volume of Bitcoin now being bought and sold is large enough that institutional investors see an opportunity to participate, he explains.
What Do Passive Investors Need to Know About Bitcoin?
More than anything, Abner encourages consumers to know what kind of investor they are and buy Bitcoin only in a way that works with their long-term strategies. He points to the famous value investor Warren Buffet as an example of someone who’s chosen to opt out of the crypto market because it doesn’t fit in with his overall approach.
“People have FOMO,” says Abner — aka “fear of missing out.” “A lot of people start questioning, ‘what am I missing?’ But you want to look at your portfolio” before investing in crypto just because others are doing it.