Photo by Adam Nowakowski on Unsplash

What can bitcoin’s historical price tell us about the future?

Ask an investor what they love about bitcoin, and they’ll likely tell you what it stands for. As a new currency with no ceiling and unlimited potential, bitcoin has the capacity to change the way the world does business. Decentralized use, a system of user checks and balances, and public control makes bitcoin an attractive and probable bet for the future.

But we’re only as smart as our past. In a world where a coin can be worth upwards of $19,000 one month and less than $3,000 the next, understanding what influences these changes– and what they mean for the currency– can be the key to making the most out of BTC in the future. So, what can bitcoin’s historical price tell us? Depends on what we’re looking to learn.

The bitcoin market is only as strong as we think it is

Because bitcoin isn’t tied to a tangible commodity in a specific region (like, say, gold in America), it’s a bit harder to predict its value. The price of bitcoin is largely tied to its availability and investor interest — meaning the less BTC is available, the higher the demand, and the higher the demand, the more valuable it is. In this way, the market as we know it is tied almost directly to public perception of BTC. Of course, since there’s only a limited amount of bitcoin (just like gold, again), as BTC is purchased, more people tend to want to buy. The bitcoin market is as strong as we think it is, and as bitcoin becomes more and more popular, chances are high that the BTC market will only become even stronger.

Adoption = growth

Unless you’re an incredibly savvy investor, chances are you weren’t too familiar with BTC fifteen years ago. Ten years ago, you may have heard of it before, but that was likely it. Fast forward a decade later, and it’s hard not to be aware of BTC and cryptocurrencies in general. As the rate of adoption continue to climb, so, too, will the market’s stability. Less players almost always means more volatility, and we see that reflected in the average value of BTC and related cryptocurrencies in earlier years. In 2015, BTC started trading at around $300. By 2017, it was up to almost $20k, before plunging back down to the $3K range in 2018. Two years later, in 2020, bitcoin has more or less remained relatively consistent, even in the midst of the worst pandemic the world has seen in recent years. The moral of the story? As people continue to adopt bitcoin, it will continue to grow.

Powerhouse countries will still be impactful

When Chinese president Xi Jinping promoted bitcoin about a year ago, BTC value skyrocketed. When China added more restrictions, the price dropped significantly. As one of the world’s largest nations, even though China doesn’t back bitcoin any more than anywhere else in the world, it and every other nation’s government still has the capacity to make an impact. That’s because as bitcoin becomes more and more widely adopted, governments will attempt to regulate. We’re seeing it now, in 2020, and we can only expect regulation attempts to grow as long as BTC continues to rise in value. Bitcoin’s price fluctuations based on national influence will be an important factor to consider as cryptocurrency begins to be adopted in more and more places.

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