As a result of the 2009 global financial crisis, Bitcoin was developed to operate outside of central governments, banks, and financial institutions. Since Bitcoin was founded 15 years ago, it has faced skepticism, rejection, and volatility, but today it is slowly gaining acceptance by governments and is even being referred to as an emerging asset.
There are several reasons why the crypto currency is valuable, even though it’s notoriously volatile. Bitcoin’s price can sometimes go up by 5% or even 10% on a given day, while other cryptocurrencies may have even wider price swings.
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What Price Did Bitcoin Start At?
It was believed that Bitcoin would still only be worth a few cents if it were not for the fact that it was the first transaction to give Bitcoin monetary value. This transaction happened in October 2009, when Finnish computer science student MarttiMalmi, also known online as Sirius, sold 5,050 bitcoins for $5.02. Each coin was worth $0.0009 at the time.
Interestingly enough, the exchange took place on PayPal, which can be a bit hard to believe when you consider how many crypto exchanges are available to buy and sell Bitcoin these days.
What Determines Bitcoin’s Price?
The prices of Bitcoin are affected by many factors such as the price of the stock market as well as several other factors such as the degree to which the Federal Reserve raises interest rates to combat the inflation crisis. At present, the price of Bitcoin is highly dependent upon the stock market and has struggled to keep up this year.
Aside from the problem of inflation, the fragile geopolitical climate has also negatively impacted markets, with the energy crisis that is being caused by the war in Ukraine putting stress on the economy.
It is believed that over time, Bitcoin enthusiasts will be able to decouple the cryptocurrency from the rest of the financial markets, which will reduce its volatility and allow it to function as a more credible store of value in the future.
However, for now, it may remain a high-risk asset, prone to huge fluctuations in price.
Easy Accessibility To Public
In the last decade, cryptocurrencies have established themselves as a new asset class that can be used both as a store of value and as a mode of exchange. However, they are just beginning to gain attention as legit payment methods.
Although many people do not want to use cryptocurrency for transactions, they convert their cash to crypto because they believe its deflationary nature makes it an excellent way to store value and protect against inflation, even if it is not used for transactions.
Halving
Bitcoin’s inflationary system is subject to something called “the halving.” The halving occurs every time 210,000 blocks are added to the blockchain, which cuts rewards by half to the miners. In addition, this happens roughly every four years and is written into Bitcoin’s code.
As a result, Bitcoin’s inflation rate can be cut by half every four years, resulting in higher prices if demand remains constant.
Scarcity
Even though there is still Bitcoin to be mined, the total number of Bitcoin that will ever be in circulation will never exceed 21 million.
Since Bitcoin’s supply is limited, many people view it as a deflationary currency and an ideal store of value. If the supply never increases, the price of Bitcoin may rise as long as demand increases.
Institutional Adoption
As a safe-haven asset against market volatility and inflation, cryptocurrencies, especially Bitcoin, are now being considered. In the present economic and societal climate, people are also holding less cash and staying hedged against market swings due to the current societal and economic climate. The conversion of cash treasuries into cryptocurrencies has recently become a trend among public companies.
What is the future of Bitcoin?
Even though regulators will shape the future of cryptocurrency, brands will also play a role, as many are joining the market to serve the growing marketplace that the government has ignored thus far. As a result, “newbies” may be able to trade in a safer, more comfortable environment, or curious intenders may be able to receive education and resources.
certain apps provide easy-to-understand content to educate intenders along the way while offering their customers the chance to dip their toes into crypto using a platform they’re already comfortable with. Finance brands, fintech disruptors, and established finance brands can all be part of the crypto future.
FAQs
What was the price of 1 Bitcoin in 2010?
It is interesting to note that Bitcoin’s price never climbed above $0.40 per bitcoin in 2010, but it reached that level in early 2011.
Where will Bitcoin be in 5 years?
During the first half of 2021, the price of Bitcoin spiked to $64,000. It fell to $35,000 in January 2022. Analysts predict that in 2025, it will surge to around $500,000 per coin and that by 2030, it will reach $1 million per coin.
What is the expected lifespan of Bitcoin?
All bitcoins are expected to be mined by 2140, at which point the last block reward will be given out.
Final Take
A Bitcoin investment should be bought and held if you believe in its long-term applications and take into account its track record since its inception. To reduce the impact of volatility on your overall investment, you can dollar cost average into it whereby you invest a certain amount of money every month regularly.
BTC is a crypto asset you should consider in terms of years, not just short-term price action. Although Bitcoin’s volatility and susceptibility to external events are becoming more prevalent as cryptocurrencies become more widespread, traders are looking forward to Bitcoin’s expansion in use cases and popularity.