The history of the crypto market shows clear cyclicality, which reflects its maturity and investor behavior. Let's look at several key market cycles that have become iconic for the crypto market:
1. Cycle of 2011
Beginning: Bitcoin (BTC) was trading at a few dollars in early 2011. Within a year, the price rose from $1 to over $30 in June 2011.
Peak: In June 2011, Bitcoin reached $31.
Fall: By November of that year, the price of Bitcoin had fallen below $2. The main reason was the hacking of one of the first cryptocurrency exchanges, Mt. Gox, which led to a decrease in confidence in Bitcoin.
2. Cycle of 2013
Beginning: Bitcoin recovered throughout 2012 and was trading at $13-20 in early 2013.
Growth: In April 2013, the price jumped sharply to $260, followed by a correction to $50. However, later in 2013, a new growth began, and in November, Bitcoin reached its all-time high of $1,200.
The Crash: This was followed by a multi-year price decline known as the "crypto winter." The price fell to $200 by early 2015. The decline was attributed to the renewed problems at Mt. Gox and waning public interest.
3. Cycle of 2017
Beginning: From 2015 to early 2017, the price of Bitcoin slowly recovered. In January 2017, Bitcoin was trading at around $1,000.
Growth: Cryptocurrencies became more widely accepted in 2017, especially with new projects launching through ICOs (Initial Coin Offerings), which attracted billions of dollars into the market. The price of Bitcoin reached a record high of $19,800 in December 2017.
The Fall: The market experienced a significant fall throughout 2018, with Bitcoin falling to $3,000 by December. Reasons included tighter regulation of ICOs, which led to a loss of trust in many projects.
4. Cycle 2020-2021
Start: A new accumulation phase began in 2020, amid the COVID-19 pandemic and central bank stimulus measures. Bitcoin prices were in the $7,000-$10,000 range at the start of 2020.
Growth: In 2021, Bitcoin reached a new all-time high of over $60,000 in April, thanks to massive interest from institutional investors (such as Tesla and MicroStrategy) and widespread acceptance of cryptocurrencies. Ethereum also surged to over $4,000.
Correction: In the summer of 2021, a correction followed, and the price of Bitcoin fell to $30,000. However, in the fall, the price began to rise again, and in November 2021, Bitcoin reached an all-time high of $69,000.
The Fall: The market experienced another sharp decline in 2022. Bitcoin fell below $20,000 and Ethereum below $1,000. Key factors were inflation risks, monetary tightening in the US, and the collapse of major projects such as Terra/Luna and crypto lending companies.
Important lessons from the cyclicality of the crypto market:
New Technologies and Hype: Periods of rapid growth are often accompanied by the emergence of new technologies, such as ICOs in 2017 or DeFi and NFTs in 2020-2021.
Correction after euphoria: Every sharp rise is followed by a correction when the market re-evaluates its value.
The market continues to evolve: With each cycle, the market infrastructure becomes more mature, new players and institutional investors emerge.
Thus, the crypto market continues to follow its cycles, in which growth and decline phases alternate, each of which is determined by both external economic factors and technological breakthroughs.
