Bitcoin's Dominance Over 15 Years – Why Is It Still Worth Investing?

Introduction

In the ever-evolving financial landscape, few innovations have been as revolutionary and contentious as Bitcoin. Born from a visionary 2008 whitepaper penned by the enigmatic Satoshi Nakamoto, this decentralised digital currency introduced a new paradigm, challenging traditional financial systems and establishing itself as a major player in the global economy.
 

Over the past 15 years, Bitcoin has weathered numerous storms, from geopolitical tensions and regulatory challenges to high-profile hacks and market fluctuations. Its resilience, adaptability, and growing acceptance by both individual and institutional investors underscore its significance. As Bitcoin continues to chart its unique course, this report delves into its storied past, its current standing, and its potential future trajectory. We aim to answer the pressing question: Given Bitcoin's dominant track record, why might it still be a worthwhile investment moving forward?

 

About Bitcoin whitepaper

The  Bitcoin whitepaper, released by Satoshi Nakamoto in 2008, aims to address the issues of traditional currency systems and proposes a decentralised digital currency system. The whitepaper provides a detailed description of key concepts such as Bitcoin transactions, proof-of-work, network structure, privacy protection, and incentive mechanisms. It serves to emphasise the characteristics of decentralisation and openness by providing guidance for the development of subsequent cryptocurrencies. The main idea was to create a digital currency system that does not rely on central authorities, ensuring transaction security through a decentralised proof-of-work mechanism. It also offers pseudonymity and encourages miners to participate in the network to ensure long-term reliability.

Bitcoin Rainbow Chart, some key points that investors need to know:

1. Meaning of colours: Typically, red and orange areas indicate an overheated market, possibly in a price bubble, while blue and purple areas indicate a potentially undervalued market with buying opportunities.
2. Not an absolute buying and selling indicator: Although the Rainbow Chart can provide an intuitive impression of market sentiment, it should not be used as the sole basis for making buying and selling decisions. Investment decisions should be based on multiple factors and detailed research.
3. Long-term perspective: This chart is most suitable for long-term investors as it focuses on macro market trends rather than short-term price fluctuations.
4. Updates: As the market evolves, the parameters and ranges of the Rainbow Chart may need occasional updates to maintain relevance.

Source: Coingecko
 

Bitcoin's Path over the past 15 years
 

2013: On March 25, 2013, the Cyprus government, European Central Bank, and International Monetary Fund announced a bailout of 10 billion euros for Cyprus, and imposed a tax on all accounts in Cyprus with deposits exceeding 100,000 euros. As a well-known tax haven, Cyprus banks held a significant amount of offshore accounts for wealthy individuals worldwide. To avoid taxation, account holders in Cyprus bought a large amount of Bitcoin, driving the price from US$80 to US$260.

On April 10, 2013, following the news of the Cyprus bailout, the world's largest Bitcoin exchange, Mt.Gox, experienced a sharp decline in price due to the Chinese government declaring Bitcoin as non-currency and banning all financial institutions from participating in Bitcoin-related activities.

2014: On February 24, 2014, amidst accusations within the Bitcoin community, the Bitcoin exchange Mt.Gox announced its closure. Mt.Gox revealed that over 850,000 user and company-owned Bitcoins had been stolen over the past few years, resulting in a loss of US$450 million.

On October 6, 2014, the Bitstamp exchange experienced the largest sell order in history, with a trader selling 3,000 Bitcoins at a price of US$300 per coin. On the same day, Bitstamp was hacked, resulting in the theft of 18,866 Bitcoins worth $5.2 million. The hacker gained access to the hot wallet's private keys by compromising an administrator's account. Bitstamp suspended operations for 8 days to fix the system vulnerability. Although no users suffered financial losses in this hack, market confidence plummeted, causing a sharp decline in Bitcoin's price.
 

2016: On August 2, 2016, Bitfinex, the world's largest Bitcoin exchange, was hacked, resulting in the theft of 119,756 Bitcoins worth over US$72 million. On the same day, Bitcoin's price plummeted by 20%.

2017: On March 3, 2017, Bitcoin's price surpassed US$1,000 for the first time in 3 years, mainly due to extensive media coverage attracting new investors.
 

On June 15, 2017, Bitcoin experienced a 15% drop in a single day and a 30% drop within 3 days due to rumors of a comprehensive ban on cryptocurrency trading by the People's Bank of China.

On September 4, 2017, after the release of the "Announcement on Preventing the Risks of Token Issuance Financing" by the People's Bank of China and six other ministries, Bitcoin experienced a cliff-like decline.
 

On October 20, 2017, Bitcoin's price hovered around US$6,000, reaching a new all-time high. Within 1 hour and 35 minutes, from 13:39 to 15:14, the price rapidly rose from US$5,640 to US$5,975.
 

On December 7, 2017, Bitcoin's trading price surpassed US$15,000 and 100,000 Chinese yuan for the first time.
 

2018: On December 16, 2018, Bitcoin's price hit a bottom at US$3,200, declining over 80% from its all-time high.

2019: On the evening of October 26, 2019, Bitcoin's price surged from US$7,600 to US$10,800, a 40% increase in a single day, marking the third-largest price swing in Bitcoin's history.

2020: On the evening of March 12, 2020, the cryptocurrency market experienced a US$2 billion liquidation, with the largest liquidation amount reaching US$58.3 million and an average of US$51,000 per liquidation.

2021: On March 13, 2021, Bitcoin surpassed the US$60,000 mark.

On April 10, 2021, Bitcoin reached its all-time high of US$64,800.

On June 9, 2021, the President of El Salvador proposed making Bitcoin the country's legal tender, and on June 9, the proposal was passed by a majority vote in Congress. El Salvador became the first country in the world to adopt a virtual currency as legal tender.

On November 9, 2021, Bitcoin reached a new all-time high of US$68,300.

2022: On March 1, 2022, the U.S. Treasury Department issued new regulations prohibiting Americans from providing any support to Russian oligarchs and entities, including through the use of digital currencies or crypto assets. On the same day, Bitcoin's price experienced a short-term surge from around US$41,800 to nearly US$44,000, with a 24-hour increase of over 14%.

On June 14, 2022, influenced by the LUNA collapse event, Bitcoin's price briefly dropped below US$21,000, reaching a low of US$20,846, the lowest point since December 16, 2020.

On October 4, 2022, Bitcoin fell below the US$19,800 mark.

2023: On August 17, 2023, Bitcoin's price fell below US$29,000 per coin for the first time since August 7, with a 0.58% decrease within 24 hours.

In September 2023, Bitcoin dropped below US$25,000 per coin, experiencing a decline of over 3% in a single day.

Bitcoin and Beyond: Projections and Trends

1. The cryptocurrency market has experienced a widespread surge

In recent days, the cryptocurrency market has witnessed a significant surge across the board. Market confidence has been bolstered by the listing of BlackRock's iShares Bitcoin Trust on DTCC (US Securities Centralised Depository and Clearing Corporation). This development is widely interpreted as a precursor to the introduction of spot Bitcoin ETFs in the market. Bloomberg ETF analysts have also indicated that BlackRock plans to inject seed ETF into their ETF in October, further signaling the imminent arrival of spot Bitcoin ETFs for investors.
 

2. The ETF market holds immense potential

The participation of major institutions such as BlackRock, Invesco, and Fidelity in the cryptocurrency space has prompted investors to reevaluate their perceptions of cryptoassets, dispelling doubts and fears surrounding the industry. According to ETFGI statistics, as of June 2023, the global ETF market's total assets under management are nearing US$10 trillion. With the successful approval of cryptocurrency ETFs, cryptoassets will seamlessly enter this US$10 trillion market, injecting a significant boost to their value. Increased liquidity and the influx of professional traders will follow, driving the price of Bitcoin higher.

3. Future market trends to watch

What can we expect for the future of cryptoassets in the market? Externally, the prevailing view is that Bitcoin and Ethereum are primarily seen as technological assets, and their value tends to fluctuate in response to macroeconomic monetary policies. Internally, Bitcoin is set to undergo a halving event in May 2024, reducing its production from 6.25 to 3.125. The scarcity of Bitcoin is a key reason why mainstream investors currently favour Bitcoin over Ethereum. In terms of market rotation cycles, it is common for Bitcoin to lead the upward trend, followed by Ethereum, and then a rotation towards Altcoins.

4. Other cryptoassets worth considering

Apart from Bitcoin and Ethereum, there are other cryptoassets that deserve attention. Firstly, within the Bitcoin ecosystem, there is immense potential for continuous exploration, whether it's related to Bitcoin network payments, Layer2 solutions, privacy-focused projects, or upcoming innovative ideas. Secondly, there are DeFi-related currencies within the Ethereum ecosystem. Decentralised finance has always been a central narrative of the Ethereum network, enabling users worldwide to establish trustless decentralised networks and enhance financial efficiency across various domains.

Disclaimer: Cryptocurrencies are subjected to high market risk and volatility despite high growth potential. Users are strongly advised to do their research and invest at their own risk.

About Bitget

Established in 2018, Bitget is the world's leading cryptocurrency exchange and web3 company. Serving over 20 million users in 100+ countries and regions, the Bitget exchange is committed to helping users trade smarter with its pioneering copy trading feature and other trading solutions. Bitget Wallet, the web3 arm of Bitget, is a decentralised multi-chain digital wallet supporting 250,000+ cryptocurrencies across 90+ chains, enabling exploration of DEX, DeFi, NFT, and metaverse. Bitget inspires individuals to embrace crypto through collaborations with credible partners, including legendary Argentinian footballer Lionel Messi and official eSports events organiser PGL. 

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