How the dynamics of the Bitcoin rate have changed over the entire history of its existence?

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Being the first-ever cryptocurrency in the world, Bitcoin keeps topping the list of the most popular and pricey ones. A lot of new digital assets have started developing quite frequently, especially after the boom of DeFi (decentralized finance) in 2020. Their technology, interoperability, and transaction throughput might be higher than that of Bitcoin. Nevertheless, the oldest crypto continues to be number 1 by market cap and other economic characteristics as well.

Scientists are also paying increased attention to Bitcoin, trying to figure out why 13 years after its inception, BTC is still the best in the fast-paced technology world. A lot of research has been made about this subject. Researchers provide data on the dynamics of the Bitcoin price swings. It is influenced largely by media coverage and public sentiment, yet also other factors such as regulations, mode of recognition, macroeconomic landscape influence price dynamics as well.

Let’s see whether the Bitcoin rates show the same patterns through the course of its existence or they are changing and whether they need to be considered.

Bitcoin rates history

It is hard to believe but back in 2010, Bitcoin was worth only $0.0008. That year, its first historical price jump brought BTC to $0.08. Next year in spring it was already $1 and shortly after that, it soared to $32 only two months later. However, the first downturn occurred soon and Bitcoin dropped all the way back to $2 at the end of 2011. Although, in summer 2012, the price increased to $13.

Roughly a year after that, investors were in the middle of another historical price rally with Bitcoin price shooting up to $220 and dropping down to $70 over one month of April. The year 2013 was marked by the second price bubble towards the end with $123 low and $1,156 high. In 2015, the asset was down to $360, and in 2017 it survived the next biggest rise and fall from           $19,783 to $6,200 and then $3,300 in 2018.

At the beginning of 2020, Bitcoin was as low as $7,000 and then the biggest rally ever began. By the beginning of 2021, it surged to $60,000 per unit and then the market crashed to about $30,000, recovering a few months later to $50,000.

How did the price dynamics change?

Some researchers try to predict the future price of Bitcoin by looking at its historical patterns but this approach is not sufficient. Because this cryptocurrency is extremely sensitive to the information that is circulating in public media, every other year is different from another and every other event has some effect on the price. Perhaps, the price of BTC also depends on the combination of factors. That is why it is possible to suggest that the price dynamics of this digital asset always change and never stays the same. That’s why it’s so unpredictable. The thing is that investors and traders are 100% sure that the volatility exists and that the price swings are about to occur in the future. Yet, nobody can tell for sure when, where, and what values will be at stake.

For example, one tweet of Elon Musk might have a profound impact on the market while the other one goes unnoticed. One news about Michael Saylor buying a large number of Bitcoins provokes a surge in price but the next time he does it – no one cares.

It is worth mentioning that regulatory and legal approach to Bitcoin in different countries also impacts the price dynamics. Especially it is true if some serious moves are being taken by major players like China (the country which generates about half of the whole BTC hash rate), the USA, and the UK.

Bitcoin rate patterns

The first and most stable pattern is the famous Bitcoin halving. Every four years, the Bitcoin blockchain cuts the reward for the miners in half. That’s when usually the price surge occurs. This event happened every time the Bitcoin halved, and 2020 is no exception, although the latest rally might have been heated by the Covid-19 pandemic.

Traditionally, a Bitcoin to dollar rate plays a major role in determining the value of the oldest cryptocurrency. A lot of people have used to checking a USD to BTC converter at the crypto exchange to understand the current rate. If ten years before we could talk about the Bitcoin rate that is applicable to the entire market, today it depends on a particular place where you are holding or trading these coins. Because the number of markets has been growing exponentially together with the price of the asset. That’s why, if you trade at one exchange, like CEX.IO, the price on this exchange could be different from, for example, the price on another exchange.

Active trading also makes for the constant fluctuations in the rates of Bitcoin. What’s more, certain types of trading suggest the presence of the so-called limit orders which execute only upon certain price conditions are met. This makes the markets even more unpredictable because if the market only depends on its internal order book, sudden price jumps may provoke an avalanche of limit orders being executed.

Finally, researchers suggest that Bitcoin price rates indeed have been pretty stable in the long-term perspective. As a result, media sources began comparing the oldest crypto to a traditional hedge asset like gold. If we think of Bitcoin price fluctuations as a random variable set, we can apply the law of large numbers and see why the average price dynamics even out over a considerable period of time.

Hi, I'm Raj Hirvate and I am a Tech Blogger from India. I like to post about technology and product reviews to the readers of my blog. Apart from blogging i'm a big Anime fan I Love Watching Naruto, One piece and Death Note.