TLDR: The road to 100k was bumpy and took longer than many of us expected. Let’s look back on the milestones on the way there: seven memorable events in the seven years since 2017. The highs and the lows, the euphoria and the despair. We conclude with looking to the future. Based on the assumption of continued increased adoption, the power law model suggests that a 1 million BTC will be reached around 2032.
We have come a long way. Who could have told you in 2017 that the chairman of the U.S. Federal Reserve, would remark about Bitcoin in an interview, in 2024:
‘It’s just like gold, only it’s virtual. It’s digital.’ ‘
Apparently discrediting bitcoin is no longer fashionable.
A rising price lifts all boats, and makes everyone pay attention. Let’s review what events caught people’s attention.
Seven Memorable Moments Since 2017
1. Bitcoin Reaches $20,000 – December 2017
Bitcoin hit an all-time high of (almost) $20,000 in December 2017, driven by retail investor frenzy. 2017 was the year of worldwide brand recognition of Bitcoin. Anyone who remotely followed the news, could not NOT have noticed the frenzy surrounding this new, ‘magic internet money’. But as every insider noted, this was a bubble forming. The meteoric rise (almost a 25x in 12 months) was followed by a brutal correction, with Bitcoin losing 80% of its value over the next year. Triumphantly, the naysayers declared Bitcoin dead – again.
2. Crypto Winter and Regulatory Crackdowns – 2018
The 2018 crypto winter was as brutal as they come. Bitcoin dropped from 20k to 6k and seemed to have found a floor. But in November 2018 the knife was twisted extra deep: BTC crashed another 50% to 3k. In the meantime, China imposed a blanket ban on crypto trading and Initial Coin Offerings (ICOs), causing another drop in market sentiment. In the US, the SEC also ramped up enforcement actions against ICOs, labeling many as unregistered securities offerings. Several high-profile ICOs were fined or shut down.
3 DeFi Summer and New All-Time Highs – 2020
After a 2019 rally that reignited hope, Covid came and brutally crashed the crypto markets again, dipping close to the 2018 lows. But recovery was swift this time, and the work that the developers across ecosystems had been doing, was starting to pay off. In the summer of 2020, several DeFi applications started gaining traction: Compound, Aave, Uniswap, and their kin. ‘DeFi summer’, as it became known, attracted a new wave of speculative capital, pushing up prices. It also showed that crypto was delivering on promises of use cases beyond Bitcoin, such as lending and borrowing.
In the autumn of 2020, BTC breached all-time highs and went on a blistering rally. Ethereum and altcoins followed suit.
4 Tesla Buys Bitcoin – February 2021
In a market that was already hot, Elon added fuel to the fire on a few subseauent occasions. First by casually mentioning Bitcoin in is Twitter bio. Pump. Then by announcing a $1.5 billion purchase of Bitcoin for Tesla’s coffers. Pump. Then by accepting Bitcoin for car purchases. Pump. Never mind that hardly anyone bought a Tesla with BTC – all these actions legitimized Bitcoin some more in mainstream finance.
Later in 2021, Tesla reversed its decision to accept Bitcoin due to environmental concerns. Coinciding with yet another China ban on Bitcoin mining, it caused a big market crash. Although crypto prices would recover later that year, it was the first strong signal that the bull market was nearing its end.
5 El Salvador Announced Bitcoin as Legal Tender – June 2021
El Salvador became the first country to adopt Bitcoin as legal tender, sparking widespread debate about Bitcoin’s role in national economies. Announced at Bitcoin Miami in June 2021, it took another three months for BTC as legal tender to become law. Hailed by Bitcoiners as a groundbreaking moment – and rightfully so – the move faced criticism from institutions like the IMF.
El Salvador’s announcement came too late save the bull market. The first cracks had already become apparent and when the Federal Reserve announced its first interest rate hikes in the fall of 2021, the crypto markets stood at the edge of a precipice – even though, at the time, investors were still in denial. That’s always the case around tops.
6 Terra Luna and FTX Crash – Spring to Autumn 2022
The spring of 2022 was possibly the darkest period in crypto since the downfall of Mt. Gox in 2014. In rapid succession, stablecoin Terra Luna and a slew of centralized crypto lending companies crashed. At each turn, people thought: this must be the capitulation. But every time investors thought prices couldn’t go any lower, a new disaster happened: Three Arrows Capital, Celsius, BlockFi… Finally, FTX went under, twisting the knife into the bloody mess that was the crypto market.
But for experienced market watchers, something interesting happened: the BTC price didn’t plummet further after this final FTX piece of bad news. In a classic example of bullish divergence, prices bottomed around the time of the FTX news and started slowly climbing again.
7. U.S. Bitcoin Spot ETF Approval – January 2024
The bear market awoke from its state of lethargy when Blackrock announced, in June 2023, that it would file for a Bitcoin ETF. Indeed, as expected, the American financial watchdog SEC capitulated and approved a slew of Bitcoin ETFs in January 2024. The markets had rallied months in advance of this news and kept pumping afterwards. For years, it has been a mantra: ‘The institutions are coming.’ And now they finally had an entry to enter the market.
8 BTC breaks 100k
The markets seem to always want to inflict the maximum amount of pain. After the ETF rally of late 2023 and early 2024, everyone was calling for higher highs soon. But the BTC price stalled for a full eight months, exhausting investors. The only person being able to break this spell was the orange man himself. Orange man good for orange coin. On election night, it was the Bitcoin price which signalled that Trump had won, way before the big news stations called his victory. The road to 100k, which had been elusive for so long, came within weeks. The spell had been broken.
Peeking into the Future with the Power Law Model
As we celebrate the move from 10k to 100k, a natural question pops up: when, if ever, could BTC reach 1 million dollars per coin?
As the BTC price climbs, a price jump of another order of magnitude becomes harder and harder. The jump from 1 dollar to 10 dollars only took six months or so. The jump from 10k to 100k took more than 7 years.
The Bitcoin Power Law model isn’t new but has gained renewed attention in recent months. It has been holding up well and is easy to use. Contrary to common log-linear plots, the Bitcoin Power Law utilizes logarithmic scales on both the x-axis and y-axis. This way of plotting strips away day-to-day volatility and reveals an interesting relation between price increase and time increase.
It doesn’t make complicated assumptions about what drives the price: it simply highlights the time-based dynamics of the price. Like a serpentine, the BTC price curls around the green mean regression line.
Just taking the green line as a reference point (the ‘fair value’), you can see how it took, from 2016 to 2019, to get the green line from 1k fair value to 10k. It then takes the line 5 more years to reach the 100k threshold, which we incidentally crossed mere weeks before the projected green line did.
Based on the assumption of continued increased adoption, the power law model suggests that a 1 million BTC will be reached around 2032. So, there you have it. Not financial advice 😉 But I can’t wait to write the article in 2032, looking back on 6 years of ups and downs…
Conclusion
Did you hear that Paul Krugman, Nobel Prize-winning economist, is quitting as a New York Times columnist after 25 years? Krugman has always viewed Bitcoin as a pyramid scheme. His resignation fittingly coincided with BTC reaching 100k, even though it of course had nothing to do with it. But it feels like a fitting signal: the old guard of financial analysts is slowly but surely giving way to a new generation. And Bitcoin just keeps tick-tocking the next block…
Erik started as a freelance writer around the time Satoshi was brewing on the whitepaper.
As a crypto investor, he is class of 2020. More of a holder than a trader, but never shy to experiment with new protocols.
