History of Three-time Bitcoin Plunge
Bitcoin crashed again, as of Nov 22, 2018, Bitcoin price has dropped around 30% (roughly $1,900) in the past week.
From January 3, 2009, when Satoshi Nakamoto mined 50 bitcoins from the creation zone, the price of Bitcoin rose from 0 all the way to the historical peak, more than $ 20,000, but the process was not smooth. It’s been through several rounds of ups and downs.
The First Plunge: 93%, from $32 to $2. Time period: from Jun 2011 to Nov 2011, five months.
On November 1, 2011, one Bitcoin was worth 30 cents. However, in the following months, with major price increases, it broke through 1 US dollar, all the way to 10 US dollars. By June 9, 2011, the price of a bitcoin had reached $32, an increase of about 100 times in half a year.
All this was interrupted by a hacker incident. In mid-June 2011, a user named Allinvain claimed that his 25,000 Bitcoins, which were worth $500,000 at the time (now worth $5 billion!) were stolen. On June 19th, there was a shocking scene. The price of bitcoin fell dramatically. There was a period that the price dropped from $17 to $10 in one minute, and the price was further reduced to $0.0134 in a few minutes. In the end, a total of 260,000 bitcoins were sold at a price of 1 cent. After 30 minutes of heartbreak, the price returned to $13.
After-the-fact investigations showed that an account with a large amount of bitcoin was hacked, and it was sold at a low price, and another account was used for purchasing them at the bottom price. This incident seriously shook the confidence of the Bitcoin community. About half a year later, Bitcoin fell back down to 2 US dollars, which was more than a 90% lower drop from the peak in June.
The Second Plunge: 80%, from $266 to $50. Time period: Apr 2013, a week.
In the whole year of 2012, Bitcoin transactions were not active, and the media did not pay too much attention to it, but the price slowly climbed back from $2 to $10.
Several major events at the end of 2012 re-ignited Bitcoin, skyrocketing the price again to more than 10 times in two months since February 2013. The main reasons were:
First, the four-year production will be halved. According to the design of Bitcoin, the creation of a new block every 10 minutes will reward 50 bitcoins, generating 7200 SGD per year, halving every 4 years; with the first halving occurring on November 28, 2012.
Second, the integrated miners was introduced into the market. According to Bitcoin’s POW rule, capacity is the right to allocate, and some people are gradually involved in the production of mining machines for Bitcoin mining. With the listing of “Pumpkin Zhang” and “Baked Cat”, the difficulty of mining Bitcoin was increasing, which means that the marginal cost was increased.
The third event was a fast response to the hardfork. On March 12, 2013, a Bitcoin miner using version 8.0 created a large block, but it was incompatible with the block created by the 7th version. Some new uses recognized the new version, but users from the old version refused and produced their own independent blockchain, causing a fork. After the problem of being considered a “51% attack rehearsal”, Bitcoin prices fell by 30%, but the final problem was properly resolved within one day, which greatly increased market confidence.
Fourth, the financial problem in Cyprus improved the public’s view on cryptocurrency. The Cyprus banking crisis in March 2013 highlighted the inability of national credit endorsements.
Under the influence of this series of factors, on April 10, 2013, Bitcoin rose to a maximum of $266. When the mass carnival was staged, the plunge struck and fell to $105 that night. Within a week, the minimum fell to 50 US dollars, a drop of nearly 80%.
The Third Plunge: 87%, from $1,242 to $150. Time period: from Dec 2013 to Jan 2016, 13 months.
After the previous sharp fall in April 2013, Bitcoin gradually recovered. In late May 2013, the price recovered to $130. On November 29th, the price reached a record high of $1,242.
For this period of skyrocketing, it was said that the contribution of Chinese users had been indispensable. According to estimates, by November, China’s bitcoin holdings had ranked second in the world, and the transaction volume ranked first in the world.
On December 5, 2013, the Chinese central bank and five other ministries announced: “Notice on the Prevention of Bitcoin Risk”, Bitcoin prices fell by more than 50% in two days, with a stabilizing price of $576. Subsequently, Bitcoin was ushered in a downturn for several years. At the beginning of 2015, it fell to a minimum of around $150, a drop of over 80%.
As of Nov 22, 2018, Bitcoin price has dropped around 30% (roughly $1,900) since Nov 14. Some people believe that it was affected by the war between BCHSV and BCHABC, the computational war showed some POW cryptocurrency are highly dominant by few big miners. It conflicts the decentralized concept of the blockchain.
I personally believe that this round of Bitcoin crashed was caused by over issuance of USDT. America SEC and justice department investigate USDT at the same time. USDT and Bitfinex (a cryptocurrency trading platform) belong to the same company. The only way to avoid the fact being found out, they have to sell a huge amount of BTC. As for the future, they can not care too much about it. They have to keep them survive for now.
For the real reason of the falling, no one knows the answer now. What we can know is Bitcoin has experienced many ups and downs, and we hope Bitcoin will recover, so the blockchain industry could grow faster.
1. Bitcoin is closer to the classical currency of “gold”. Due to its limited supply characteristics, it is vulnerable to capital speculation. The ups and downs of the value of the currency make it difficult to assume the role of modern “fundamental currency.”
2. The mechanism for halving Bitcoin every four years is quite interesting. On the one hand, it is a good incentive for early users, on the other hand, when it reaches to a certain stage, the marginal cost will be too high, and even the whole product will be inactivated and face changes.
3. As a new thing in the “extraordinary land”, Bitcoin has shown great vitality. Several rounds of skyrocketing and plunging have objectively contributed to the popularization of blockchain knowledge and technology promotion.
Crypto asset trader