Bitcoin (BTC) has captured the world’s imagination with its massive rise in value since 2009. However, it has not all been bull runs and gains, Bitcoin has experienced dips and bear markets too. Despite its volatility, the cryptocurrency has so far outperformed all traditional assets.
Let’s revisit Bitcoin price history to find out how much was Bitcoin in 2009, the year that it was established as the original cryptocurrency. From there, we will study a combination of multiple factors that make up the Bitcoin price history.
How Much Was Bitcoin in 2009?
Bitcoin Price in 2009: $0
On January 3rd, 2009, the Bitcoin network went live with the mining of the genesis block, which allowed the first group of transactions to begin a blockchain. Bitcoin had a price of zero when it was introduced then, and was worth $0 for the remainder of its first year in existence since it was not trading on any exchanges. Its first recorded price was in 2010 and it wasn’t until July of that year that Bitcoin was able to reach $0.08 per coin.
A part of its value is also derived from the scarcity of its supply – as more units are mined from its capped 21 million maximum supply, the total circulating supply of Bitcoin decreases, making each available unit more valuable as more are mined from this finite supply. Therefore, it would not begin to increase its value until it gained more traction and use.
Which Factors Influenced Early Bitcoin Trading?
In 2009, Bitcoin was an extremely niche asset with low liquidity. Trades were made Over-the-Counter (OTC) between users on BitcoinTalk and other forums who saw Bitcoin’s value as a decentralized currency. The speculation that we see today played much less of a role.
On May 22, 2010, Bitcoin still had a price of less than $0.01. That day also saw the first commercial Bitcoin transaction with Laszlo Hanyecz purchasing two pizzas for 10,000 BTC. At the time, users on the Bitcointalk forums saw the purchase as a novelty. This trade contrasts with current use, where you can purchase everyday goods easily with a MasterCard.
As Bitcoin’s price and popularity rose, a small, unregulated industry became increasingly involved in facilitating transactions and trading. These included cryptocurrency exchanges and deep web markets. Bitcoin’s price was often significantly affected as these markets and exchanges were hacked, closed, or regulated. Some hacked exchanges held substantial Bitcoin supplies, causing significant price shocks and a lack of market confidence. More factors would later begin to affect Bitcoin trading.
Bitcoin Price History
Since 2009, Bitcoin’s price has been subject to large volatility. The factors mentioned above have all contributed to its journey so far. Although the price has had its ups and downs, the price is still dramatically higher than when it began.
According to CaseBitcoin, BTC has shown a 10-year compound annual growth rate (CAGR) of 196.7%. CAGR measures an asset’s annual growth rate taking into account compounding. There have been five significant peaks in Bitcoin’s price, rising from only $1 in 2011 to an all-time high of $65,000 in May 2021. We can break down the history so far into five distinct peaks.
1. June 2011: From a price measured in just cents the year before, Bitcoin made a meteoric rise to $32. Bitcoin experienced its first bull run followed by a moderate crash down to $2.10.
2. April 2013: After beginning the year at roughly $13, Bitcoin experienced its first bull run of the year, rising to $260 on April 10, 2013. The price then crashed over the next two days down to $45.
3. December 2013: By the end of the year, Bitcoin experienced an almost 10-times price increase between October and December. At the beginning of October, BTC was trading at $125 before reaching its peak of $1,160. By December 18, the price had once again crashed to $380.
4. December 2017: After starting at roughly $1,000 in January 2017, Bitcoin saw a meteoric rise in price to just under $20,000 by December 17, 2017. This bull run cemented Bitcoin’s position in the mainstream, catching the attention of institutional investors and governments.
5. April 2021: Crashes in the stock market and crypto market in March 2020 led to a sustained price rise up to $63,000 by April 13, 2021. With economic instability from the Coronavirus pandemic, Bitcoin was seen by some as a store of value. BTC and the crypto market then saw a significant selloff in May 2021 before stagnating in price.
Which Factors Influence Bitcoin Trading Now?
Bitcoin now shares more in common with traditional assets than in its early days. Increased adoption in retail, finance, and politics means even more factors affect Bitcoin’s price and trading. Institutional investment in virtual currencies is also growing, giving speculation a bigger role. These points mean that the factors that affect Bitcoin's trading today are often different from those in its early days. Let's discuss some of the largest ones.
1. Regulation is now much more present than in Bitcoin’s earlier days. As governments begin to understand cryptocurrencies and blockchain technology more, their control and regulatory input tend to increase. Both the tightening and loosening of regulations have their impacts. Some changes in Bitcoin’s price are related to the banning of BTC in one country or its popularity in another.
2. The state of the global economy is now a direct factor in Bitcoin’s price and trading. For example, people living in countries with hyperinflation have turned to cryptocurrencies as a hedge against inflation. As a result of Venezuela’s economic crisis beginning in 2016, we’ve seen record-high trading volume on LocalBitcoins in Venezuelan Bolivar. The 2020 stock market crash saw the beginning of the Bitcoin bull run that lasted over a year. Bitcoin is now seen as a store of value, much like gold. When confidence is low in other parts of the economy, people purchase these assets.
3. Increasing mainstream adoption from large companies can trigger rallies in Bitcoin’s price. Paypal, Square, Visa, and Mastercard have all shown some support for cryptocurrencies, giving investors confidence. Retailers have even started accepting Bitcoin payments. The withdrawal of support can also trigger selloffs, such as Elon Musk’s announcement on May 17, 2021, of Tesla halting Bitcoin payments. In this case, the price went from just under $55,000 per BTC to roughly $48,500 that day.
4. Increased speculation and derivatives such as Bitcoin futures have driven extra demand in the market. Rather than invest and hold BTC for its fundamental value, traders and speculators in the futures market short BTC for profit, causing downward pressure on the price. This means that Bitcoin’s price is no longer solely based on its utility.
Closing Thoughts
Looking back at how much was Bitcoin worth in 2009, its almost 200% 10-year CAGR has shown the incredible rise of digital currencies. The reasons behind this monumental growth include the crypto’s fundamentals, market feeling, and economic events. However, past performance is not indicative of future results.
It’s helpful to understand why Bitcoin has had such a high price trajectory, but it doesn’t tell us what will happen in the future. Though when we look at the bigger picture, Bitcoin has matured incredibly well for a new asset class that’s only 12 years old.
