06 December 2024

We have done it! 🎉

Collectively, we have built the greatest innovation towards financial independence in the past 15 years – Bitcoin breached $100,000 for the first time ever yesterday, a figure that looked far from easy in November 2022 when it crashed below $17,000.

This calls for extended celebrations.

Well, what happens now? We dream of the next big target - $200,000. But before, let us recount Bitcoin’s journey and cherish the memories.

Top-3 stories of the week:

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The newsletter is put together by Giottus Crypto Platform. You can read all the previous issues of Cryptogram here.

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WEEKLY MACROS

• Total crypto market cap - $3.6 trillion - UP  7.8%

• Bitcoin price - $98,057 - UP 2%

• The dollar index (DXY) - 105.83 - DOWN 0.1%

• Bitcoin Dominance - 55.32% -  DOWN 5%

• Crypto Fear and Greed Index - 81 - Market is in Extreme Greed

THE HOT TAKE

Bitcoin’s ascension needs to be celebrated

What an amazing week it has been for Bitcoin enthusiasts!

By reaching the pivotal $100,000 mark yesterday, the crypto asset has officially skyrocketed by more than 150% since a low of $38,678 earlier this year. Its market cap is quickly risen over $2 trillion, larger than the entire GDP of Australia or Spain. 

Let’s dive into the remarkable journey of Bitcoin and uncover how it evolved to achieve its significant status today.

Humble Start: 10,000 BTC for 2 Pizzas

• In 2009, Bitcoin was introduced by the mysterious Satoshi Nakamoto as a way to take control of money without banks or governments, using a secure digital system called blockchain.

• A year later, Bitcoin made its first real-world splash when someone used 10,000 BTC to buy two pizzas—now celebrated as "Bitcoin Pizza Day." If they had held those coins today, they would be a billionaire today.

• Despite facing scandals like the Silk Road and Mt. Gox collapse, Bitcoin survived scepticism and regulation, proving its resilience. Over time, it gained support from investors and companies, growing into a symbol of financial independence.

Analysing Bitcoin cycle over the years

The price movements for Bitcoin typically follows a four year cycle following each halving event. During these cycles, the reward for mining BTC transactions is slashed by half, thereby reducing the rate at which new bitcoin are circulated. In the past, these halvings have initiated a bull/bear cycle in the Bitcoin price.

Bitcoin's journey from a niche digital currency to a mainstream financial asset has been marked by significant milestones and challenges. Here's an overview of its evolution: 

1. First bull run in 2013

 In 2013, Bitcoin experienced its first substantial price surge, bringing it into the public eye and highlighting its potential as an alternative financial asset.

Catalysts

• Cyprus Banking Crisis: The 2013 financial crisis in Egypt led investors to seek alternatives like Bitcoin, showcasing its appeal as a decentralized asset.

• Media Coverage: Increased media attention amplified public interest and investment in Bitcoin.

Price Changes

• Bitcoin's price rose from approximately $13 in January 2013 to nearly $1,200 by December, marking a gain of over 9,000%.

• Following this peak, the price declined to around $200 by mid-2015, a drop of about 83%.

2. Mainstream Adoption in 2017

 The year 2017 marked Bitcoin's transition into mainstream finance, driven by retail investor enthusiasm and the rise of Initial Coin Offerings (ICOs).

Catalysts

• ICO Boom: The proliferation of ICOs attracted new investors to the crypto market.

• Ease of Access: User-friendly platforms like Coinbase and Binance facilitated easier investment in Bitcoin for the general public.

Price Changes

• Bitcoin's price escalated from around $1,000 in January 2017 to nearly $20,000 in December, a surge of approximately 1,900%.

• By December 2018, however, the price had fallen to about $3,200, an 84% decline from its peak.

3. Digital Gold Narrative in 2020-2021

 Amid global pandemic uncertainty, Bitcoin emerged as a "digital gold," attracting institutional investors seeking an inflation hedge.

Catalysts

• Institutional Investment: Companies like Tesla and MicroStrategy made significant Bitcoin purchases, signaling institutional confidence.

• Macro-Economic Factors: Concerns over inflation and currency devaluation drove investors toward Bitcoin as a store of value.

Price Changes

• Bitcoin's price climbed from around $7,000 in January 2020 to over $63,000 by April 2021, a gain of about 800%.

• A correction followed, with prices dropping to approximately $30,000 by July 2021, a 53% decline.

4. Current Cycle: Fuelled by ETFs and Institutional Adoption (2024-2025)

 The latest bull run is characterized by the approval of Bitcoin ETFs and increased institutional participation, solidifying Bitcoin's status in traditional finance.

 Catalysts

• ETF Approvals: The US SEC’s approval of Bitcoin ETFs in January 2024 opened the market to a broader range of investors.

• Regulatory Support: The election of a crypto-friendly administration under President Donald Trump and the potential appointment of Paul Atkins as SEC Chair leading to a favourable regulatory environment.

 Price Changes

• Bitcoin's price surpassed $100,000 yesterday, reaching an all-time high of $103,900 from ~$42,000 at the start of the year

 Looking ahead

If historical patterns hold true, Bitcoin could be on the verge of a swift rally toward $150,000 in the coming months—or even weeks. While the excitement of a bull market can be contagious, it’s crucial for retail investors to stay grounded and maintain discipline during these euphoric times.

The market is in a powerful position, and now is the time to stay consistent. Be grateful for the opportunity to ride this bull market, but don’t lose sight of your risk management principles.

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If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.