Bitcoin made multiple attempts at its all-time high in U.S. dollar terms in late November, and in the eyes of some, it had already succeeded the first time.
On November 30th, Bitcoin broke through $19,783, the price often cited as its all-time high, across major exchanges, three years after first setting the record.
While Bitcoin danced around its record price for a good couple of days, a general understanding settled among observers that an exact all-time high is difficult to pinpoint: different trading and analytics platforms recorded varying prices in 2017, resulting in an “all-time high range” somewhere between $19,660 and $20,000.
As 16 days later, however, Bitcoin has broken through $20,000, hitting even the highest of all-time highs, that range, too, has lost in importance: there’s a new all-time high now, and it’s somewhere above the old one. At press time, Bitcoin is trading at record highs above $20,000 on Bitfinex, Kraken, and Bitstamp, among others.
A journey that took a mere couple of months in 2017 became a bumpy three-year climb thereafter. In these three years, the economic landscape surrounding Bitcoin has changed, the public perception of Bitcoin has begun to shift, and the Bitcoin protocol and network have advanced further, making $20,000 hit very different this time around.
A Three-Year Journey
On December 17th of 2017, Bitcoin concluded a year of exponential price appreciation, shooting from less than $1,000 to five figures, then peaking just shy of the $20,000 mark.
What followed was not pretty: just five days later, the price had dropped to the $13,000’s, and by early February, Bitcoin had shed more than 69% after bidding farewell to the fourth zero. Bitcoin‘s December all-time high was added to Wikipedia and turned into a distant benchmark used by skeptics to confirm their bubble theories, while the hype that had gripped retail buyers through the latter part of 2017 vanished as quickly as it appeared.
A year-long dry spell went on to drag Bitcoin as low as $3,200 in late 2018, as silence descended upon the industry.
It was not until March of 2019 that an uptrend began to form, with Bitcoin breaking through $4,000 and going on what may now resemble a “mini-bull run”—a rally peaking at $12,000 in early July, followed by a return to the high four figures, where the price remained for a good six months.
Bitcoiners were tested one more time, however, before another attack on $10,000: when on March 12th this year, a financial crisis that had long been looming, but was eventually triggered by the pandemic, halved the Bitcoin price in a matter of hours, bitcoin owners had to stomach another low around $3,800. This time, however, the comeback was faster and stronger. Bitcoin fully recovered from the crash within a month and half—and didn’t stop there.
The Latest in a Series of All-Time Highs
Bitcoin‘s price record follows a series of all-time highs that paved the way for a breakthrough, starting with an overall upward-facing trajectory after the third Bitcoin halving on May 11th this year.
Despite block rewards being cut in half during the quadrennial event, miners piled on hash power throughout the year, driving Bitcoin‘s hash rate to an all-time high of around 157 exahashes per second on October 17th. The hash rate serves as a key indicator of the network’s health: the higher Bitcoin‘s hash rate, the more energy (and therefore cost) is required for a potential malicious actor to attack the Bitcoin blockchain.
Institutional adoption, too, has seen a surge this year that was famously led by MicroStrategy’s 38,250 bitcoin purchase and Square’s 1% allocation, with both citing Bitcoin‘s ability to hedge against inflation as their reasoning behind the move.
Digital currency asset management firm Grayscale has served as one of the strongest indicators for institutional interest, as it became the preferred destination for accredited investors to stack sats (big time). In mid-2018, Grayscale counted just under $250 million in total assets under management. On December 14th of this year, it cracked the $13 billion mark, almost $11 billion of which were invested in Grayscale’s Bitcoin Trust.
Bitcoin‘s market capitalization. Source: Coingecko
On the same day, Bitcoin broke another all-time high: for the first time since 2017, its market capitalization reached $330 billion.
Not to forget, Bitcoin‘s U.S. dollar record is just the latest in a list of all-time highs in fiat currency terms, as Bitcoin has already (infamously) reached new highs against the Turkish Lira, the Brazilian real, the Russian ruble, the Indian rupee, the Angolan kwanza, the Iranian rial, the Namibian dollar, the Sudanese pound, the Venezuelan Bolivar, and the Argentine peso, to name a few.
This Time, It’s Different
While for many, Bitcoin may just now be returning to the radar as mainstream media takes notice of it again, the industry surrounding Bitcoin has come a long way since the last all-time high. As a result, Bitcoin has instilled confidence in many that this time, the 20’s can be sustained.
As major banks like J.P. Morgan and Citibank have begun talking about Bitcoin more and more frequently or, in the case of DBS, even taken matters into their own hands with cryptocurrency service offerings, Bitcoin has received strong validation in the public eye. PayPal’s launch of a Bitcoin buy- and sell-feature only pushed Bitcoin further into the global spotlight, and away from the outdated reputation of obscure darknet money it had been stuck with for the better part of its existence.
On the technical side, Segregated Witness (SegWit), Bitcoin‘s possibly largest protocol upgrade to date, has grown from an adoption rate of 10% during the last all-time high to around 50% today, which, while still lower than many would hope, presents a sizeable increase from late 2017.
Taproot, another long-awaited upgrade to Bitcoin‘s layer one scalability and privacy, has seen notable progress too: on October 15th, the consensus rules for the Schnorr/Taproot proposal were merged into Bitcoin Core, elevating the conversation to the next level of conversation: activation on the Bitcoin mainnet.
Development work on the Lightning Network, one of Bitcoin‘s most promising scaling solutions, has progressed rapidly as the network continues to grow. In the last six months alone, Jack Dorsey-backed Lightning Labs, which is behind the lnd implementation of Lightning, has deployed an upgrade to allow for the operation of larger Lightning channels and launched a marketplace for node operators to trade access to Lightning channel liquidity.
New Bitcoin sidechains such as the Liquid Network have emerged in a bid to redirect traffic from Bitcoin‘s mainchain in times of high network congestion. While most of today’s scaling solutions were not mature enough or simply not available when Bitcoin surged to $19,000 in 2017, multiple options are operational right now: although it remains to be seen if and how today’s scaling approaches perform under pressure, they may well provide some form of relief to Bitcoin‘s layer one once traffic spikes again.
Next Stop: Moon?
Nobody knows, but everyone has an opinion.
There is a myriad of price predictions out there. From “modest” five-figure anticipations to calls for half a million, there is something for everybody’s taste and risk profile. The stock-to-flow model, created and made popular by Twitter persona PlanB, predicts a Bitcoin price somewhere between $100,000 and $280,000 by December 2021.
An analyst at Citibank went even further on November 17th in a note to the bank’s institutional clients that predicted a bull run to $318,315 until the end of 2021.
Ultimately, predictions, even if based on scientific data, remain predictions, and time will tell where Bitcoin goes from here.
More than anything, we can observe an industry that has spent the last three years quietly expanding and enhancing the Bitcoin ecosystem: by working directly on Bitcoin, by deploying layer two solutions, by building Bitcoin businesses, by launching services for Bitcoin users, or by simply stacking sats—never once doubting that the best of Bitcoin is yet to come.