Bitcoin prices have taken a significant hit in the past week. On May 18, 2021, prices crashed almost 30 percent before recovering somewhat in subsequent days.
The difference in 2021 is that far more people care about Bitcoin prices than ever before. Comparing Bitcoin then and now is like night and day. It eclipsed the trillion-pound mark this year and remains quite valuable despite the recent slump.
Prices took off again in the latter parts of 2020. Last year was financially challenging for billions worldwide as the effects of the Coronavirus Pandemic took a health and economic tool. Today, many countries are trending well, with deaths reducing sharply.
At press time, deaths were only seven in the UK, with Cheshire accounting for four. This recovery is reassuring, with the economy likely to pick up gradually.
Given Bitcoin’s dramatic year, interest is at an all-time high. Let’s explore its trajectory to its current status as a global digital asset.
Bitcoin Before 2017
A mysterious person/group called Satoshi Nakamoto developed the Bitcoin source code in 2008.
The timing was significant because it coincided with a global financial crisis. This crisis, which affected the UK and all major economies, was primarily the consequence of monetary mismanagement and greed from bankers and regulators.
Accordingly, Bitcoin came up as “peer-to-peer digital money.” Its launch had little fanfare, and Bitcoin remained a fringe internet asset for years.
Bitcoin had its breakout moment in 2013 when it became the default currency of the infamous ‘Silk Road’ marketplace. Its founder, Ross Ulbricht, was arrested for the illegal trade taking place on this site. The FBI seized the domain name and shut down the site.
Regardless, the cat was out of the bag. Millions saw that Bitcoin could be a valuable store of value in a decentralized economy. Bitcoin crossed the $1,000 mark and continued growing gradually.
Between 2013 and 2017, there were periods of unprecedented growth and crashes. 2017 was the year that ultimately catapulted Bitcoin to international stardom.
In December that year, this asset went on a historic rally and almost reached the twenty thousand dollar mark. However, the next year saw a devastating bear market that wiped out over 70% of Bitcoin’s value. Volatility remains a significant component of Bitcoin and will continue to haunt investors on the receiving end.
Regulators began to take notice and enacted basic laws to prevent money laundering through Bitcoin exchanges.
How Is Bitcoin Today?
Bitcoin has grown in stature tremendously. The major difference between four years ago and today is that institutional investors are calling the shots. Back then, it was primarily retail investors and small traders doing the bidding.
Retail investors still form a significant part of the industry. A 2020 study showed that approximately 1.9 million Britons own cryptocurrencies. The study also showed that a plurality of adults knows Bitcoin and cryptocurrencies reasonably well.
This awareness is a testament to the growth this asset has shown in recent years. The ownership is largely from millennials and generation Z, but older people are increasingly exploring this asset.
The dynamics changed last year when institutions took an interest in a resurgent Bitcoin. PayPal announced that it would facilitate crypto purchases while MicroStrategy and Tesla invested billions.
The last major hurdle for Bitcoin is regulations. Naturally, no country recognises Bitcoin as legal tender. They wouldn’t give credence to a currency that directly challenges their control of monetary issuance.
Regardless, most countries are okay with cryptocurrency trading. Bitcoin has thrived in this regulatory grey area where it is not illegal but without the express support of most regulators. Part of the concern is the amount of electricity consumption in the Bitcoin generation process called mining.
China recently warned its financial institutions not to handle cryptocurrencies. The news sent prices tumbling more than 30 percent. China has had stricter policies on trading, and the ban on banks and payment firms from providing services is an extension of that.
Where Does It Go From Here?
Predicting Bitcoin’s future is no walk in the park.
This asset can have long periods of stagnation and a few weeks of explosive appreciation.
Bitcoin’s scarcity and store of value potential give it a unique position among financial assets.
It has a fixed supply of 21 million, which restricts its growth as a currency but will make it grow stronger as an asset.
The X-factor will be regulatory developments in major economies.