What can the past tell us about Bitcoin's future?

Bitcoin has broken up by more than 50 percent in the last six months, but the owner of the cryptocurrency is used to volatility. Here we look at how the FT covered the former booms and buss from Bitcoin to see if the story is repeated.

Boom and Bust in Japan (April 2017 to March 2018)

Before 2017, Bitcoin was traded at less than $ 1,000. But on New Year's Day 2017 the cryptocurrency broke the $ 1,000 mark and it had risen to the $ 20,000 mark before the end of the year.

The boom was triggered by a stormy interest, first in Japan, then in South Korea. Small investors started playing on Bitcoin, attracted by television advertising at the main time and advertising boards with high returns. After Japan approved the retail of 11 crypto exchanges in April 2017, around 40 percent of daily trading activities came to the country worldwide.

But soon a crash followed. At the beginning of 2018, so-called Bitcoin whales, the largest owners of the cryptocurrency, started with payouts, to benefit from the high prices. The mood then deteriorated when the Japanese Stock Exchange Coincheck was hacked and $ 530 million on XEM, another popular cryptocurrency.

Although no Bitcoin was stolen, the Hack Small investor, who worried about the security of holding digital currencies, was particularly unsettling, especially after the Japanese financial supervisory authority had searched Coincheck's offices in February.

The first Bitcoin winter (March 2018 to May 2019)

Bitcoin was traded below $ 10,000 between March 2018 and May 2019 because critics and supervisory authorities expressed their doubts about his future.

In London, for example, dealers and institutions were careful for fear of fraud, financial crime and other reputation risks to deal with cryptocurrencies.

The emergency sale in early 2018 caused Bitcoin whales to concern about the influence of large accounts on the price of cryptocurrency. In April 2018, around 1,600 Bitcoin money exchanges contained almost a third of all available bitcoins. Of these, 100 brids contained over 10,000 Bitcoin.

Cameron and Tyler Winklevoss, for example, who were best known for suing Mark Zuckerberg because of the idea that became Facebook, were unsuccessful, some of the largest whales were allegedly and bought 120,000 bitcoins.

Winter intensified after a fight for a fork in cryptocurrency when new versions of Bitcoin were created and sent the price to the lowest level since the beginning of 2017.

But in June Bitcoin got a thrust from an unexpected source: Facebook. The world's largest social media company unveiled plans for Libra, its own digital currency. While Libra ultimately remained only a dream, the news that Facebook planned to start the sector's sector strengthened the confidence in Bitcoin's sustainability.

The pandemie boom (October 2020 to April 2021)

After the initial shock of pandemic, Bitcoin began to win the ground after PayPal announced that it would allow users to keep cryptocurrencies.

in the lockdown stuck and with state stimulus checks that they had to spend, small investors began to rely on the rise of Bitcoin. Within six months, the cryptocurrency rose from less than $ 12,000 to over $ 63,000.

The steep increase also caught the attention of institutional investors, and the excitement culminated with the Coinbase IPO, the largest crypto exchange, which was opened in April 2021 at NASDAQ with an evaluation of almost 76 billion USD.

But that didn't last long. China banned crypto mining in September 2021, using computers to solve puzzles to earn cryptocurrencies, although the activities were quickly shifted to other countries.

Then the United States and Europe again promised regulation.

Finally, DayTraders were involved in a frenzy of meme shares, many of them collected their bitcoins to play at the stock markets, and further fears, including Elon Musk, were expressed about the environmental costs of crypto mining. At the end of July, Bitcoin slipped to a low of just under $ 30,000.

Bitcoin suffers when the stock markets fall (July 2021 until today)

Bitcoin fans originally insisted that it was a protection against inflation and immune to fluctuations in other markets.

In October 2021, the cryptocurrency completely transferred to the mainstream with the introduction of a stock market traded fund, which made it possible to participate in his climbs and declines without keeping Bitcoin directly. Days after the ETF started trade, Bitcoin reached an all -time high of almost $ 69,000.

But as a mainstream system, his assets are much closer to the broader market mood.

Fears in the US economy at the beginning of December about increasing inflation and future interest increases dropped the price of Bitcoin, and in the following months Bitcoin fell in accordance with the downturn in US technology shares.

When inflation deteriorated this year, Bitcoin continued and had the worst week in June in 2020. ProShares, the company behind the first Bitcoin-FTT, put on a new fund to benefit from the decline of Bitcoin.

What's next?

The former Bitcoin booms were driven by small investors who stormed onto the market, hoping to make a remarkable profit in a short time. The subsequent crashes are due to the fact that supervisory authorities, the wider market or concerns about the risks of the Bitcoin owner sector have prompted.

These trends seem to continue. As Katie Martin, the author of the FT's Long View column, said Bitcoin is "the most speculative asset on the planet, possibly even the most speculative ever".

With a view to the future, while the regulatory authorities have promised to be "relentlessly tough", it remains largely unclear how future rules around cryptocurrency will work in practice. But there is more evidence of networked thinking, and if the regulatory authorities manage to set rules, they will help the crypto industry to build more trust and maybe finally provide some stability.