When bitcoin was first introduced, it had little to no value. Early adopters traded thousands of bitcoin for just a few dollars, until the infamous “Pizza Day” incident when Laszlo Hanyecz paid 10,000 BTC for two large pizzas, setting in motion a chain of events that lead to bitcoin’s value growing from a few cents to nearly $60,000 in just over a decade.
Bitcoin has come a long way since then, with large corporate institutions spending years denying its value as an investable asset, only to turn around and start investing in it themselves. Recently, PayPal introduced bitcoin as a payment method with millions of merchants that use its platform, celebrities like Paris Hilton joined the community and it seems that bitcoin is poised for even more growth.
By analyzing bitcoin’s past performance, it’s not impossible to get an idea of where its value is set to go next. Although many analysts and influencers alike have made bold predictions — like bitcoin growing to as much as $1 million — I thought it would be best to take a look for ourselves by analyzing each halving epoch, that is bitcoin’s performance between each halving event.
The chart below explores bitcoin’s value over the last 11 years, in four separate sections called the halving epochs:
The chart was inspired by a similar one I recently came across, which lacked any projections that I felt necessary to predict where bitcoin is heading next. As mentioned on the chart, each epoch is 20 times larger than the previous one and covers the times between each halving event. When analyzing and comparing each epoch, a clear trend emerges.
Epoch 1: Genesis Block (2009-01-03) to First Halving (2012-11-28)
In the first epoch, bitcoin found its footing after first being released by Satoshi Nakamoto in 2009. It took several months to see early adopters come on board and a dollar-based value be established, with Laszlo Hanyecz’s 10,000 BTC pizzas cementing its price. During this time, bitcoin saw its value rise from $0,00 to as high as $29.02, with early use limited to trading over forums and early, limited exchanges.
Epoch 2: First Halving (2012-11-28) to Second Halving (2016-07-09)
In the second epoch, bitcoin started to see further adoption. Although the infamous Mt. Gox exchange was founded in 2010 already, and had seen some controversy in 2011 with several hacks, by 2013 and early 2014, it was handling as much as 70 percent of all bitcoin transactions before the infamous hack that saw it shut down, and bitcoin seeing a large drop in value as thousands of bitcoins were stolen. Then there was the infamous Silk Road and Silk Road 2.0 platforms, which led the media to associate bitcoin with illegal activities. During the second epoch, bitcoin’s value traded for as low as $12.33 to a high of $1,134.93.
Epoch 3: Third Halving (2016-07-09) to Fourth Halving (2020-05-11)
By the third epoch, bitcoin had seen its adoption grow to new highs. The world’s largest investors and institutions were finally taking notice, with many changing their opinions on bitcoin as a decent asset and good store of value. Bitcoin’s run from a low of $526.98 to its famous peak of $19,640.51 in late 2017 was widely reported, as was the subsequent plunge in value. Although it became clear that bitcoin trading was volatile, asset managers and the average Joe alike took notice of bitcoin as an asset.
Epoch 4: Fourth Halving (2020-05-11) to Fifth Halving (Second Half of 2024)
We currently find ourselves in the fourth epoch. Public companies such as MicroStrategy and Tesla have added bitcoin to their balance sheets, new highs are being reached almost monthly and reputable investors suggest it could go as high as $1 million sometime in the near future. If bitcoin follows the same trajectory as the last epoch, I predict that it may very well reach a high of over $400,000 before, once again, seeing an almost sudden plunge in value as investors try to reap as high a profit as possible. If bitcoin…