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Technicals suggest Bitcoin is still far from ideal for daily payments

July 19, 2022 Coin Telegraph

Even with the rise of layer-2 solutions, many experts believe Bitcoin may have missed the boat as a currency for day-to-day remittances go.

It is no secret that a vast majority of investors, both from the realm of traditional as well as crypto finance, view Bitcoin (BTC) as a long-term store of value akin to “digital gold.” And, while that may be the dominant narrative surrounding the asset, it is worth noting that in recent years the flagship crypto’s use as a medium of exchange has been on the rise.

To this point, recently, the central bank of El Salvador revealed that its citizens living abroad have sent over $50 million in remittances to their friends and family. To elaborate, Douglas Rodríguez, president of El Salvador’s Central Reserve Bank, announced that $52 million worth of BTC remittances had been processed via the country’s national digital wallet service Chivo through the first five months of the year alone, marking a 3.9%, $118 million increase in value when compared to the same period in 2021.

Bitcoin as a payment medium has been on the rise, as is made evident by the noticeable increase in the adoption of layer-2 payment protocols such as the Lightning Network. To this point, BTC transaction volumes are currently up by a whopping 400% over the last twelve months.

Therefore, it is worth delving into the question of whether Bitcoin’s utility as a daily transaction medium is actually feasible, especially from a long-term perspective, as when compared to other networks like Ethereum, Solana or Cardano, Bitcoin still lags behind in key areas including scalability and transaction throughput.

Is Bitcoin’s utility as a payment method overrated?

According to Corbin Fraser, head of financial services for Bitcoin exchange and cryptocurrency wallet developer Bitcoin.com, Bitcoin has lost its first mover advantage as peer-to-peer (P2P) cash. This is due to the fact that, since 2016, the Bitcoin community has done everything possible to explain to its users that they should absolutely not use Bitcoin for payments or remittance-related purposes. He added:

“Use cases of remittance and P2P cash payments have moved to other blockchains with higher throughput, lower fees. Bitcoin will be hard pressed to re-introduce the concept of daily payments to its users and other communities focused on these use cases which have found a home under various other banners.”

Fraser stated that when one takes into consideration the difficulty side of things, such as the hassles involved with ordinary crypto users deploying layer-2 solutions like the Lightning Network to process payments, the situation becomes all the more complex. “Competition in low fee, high throughput chains has increased considerably in the past two years. Bitcoin is on its heels when it comes to shifting focus back to using it for daily payments,” he added.

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On a technical note, he highlighted that Bitcoin’s limited throughput of five transactions per second means that as people start to flock to the blockchain for daily transactions, its memory pool will fill up, causing the fee market to expand, pricing out more and more users and creating a negative experience for users intending on using it for daily payments. He said:

“Even in the event of a mass exodus from layer-1 BTC to layer-2 BTC protocols, the system will struggle both due to deposits and withdrawals to and from the Lightning Network. That said, Bitcoin’s core devs could make some changes to further enhance utility for payments. If the BTC community can rally behind the payments use case, it is possible consensus could be reached.”

A somewhat similar opinion is shared by Toya Zhang, chief marketing officer for cryptocurrency exchange Bit.com, who told Cointelegraph that even though Bitcoin was initially designed as a payment currency, the development of different protocols and stablecoins has made it highly unlikely that it will ever be used as a payment token anytime soon, even with the implementation of layer-2 solutions. She further explained:

“In the long run, limitations related to confirmation times or price volatility are not an issue. The reason for Bitcoin to not be able to fulfill its role as a remittance medium is very simple, Bitcoin is too pure of an asset. It will only fulfill its original mission if all payment-centric cryptocurrencies fail, the possibility of which has most likely sailed.”

BTC transaction numbers appear shaky

Andrew Weiner, vice president of VIP services for cryptocurrency exchange MEXC Global, told Cointelegraph that while BTC does tend to be used for large payments, technically and philosophically, it is difficult to make micropayments using Bitcoin’s layer-1 blocks, which is the very reason why so many developers are pushing micropayments on Bitcoin’s layer-2 network.

To this point, he noted that from 2018–2021, Bitcoin’s micropayments remained absolutely flat, with a public capacity of less than $5,000. However, things went to a whole new level last year, when the network went from 10 million users to approximately 80 million from October 2021 to March 2022. In this regard, Weiner highlighted:

“The main reasons for this are the reduction in the complexity of layer-2 networks (such as the Lightning Network) and the gradual maturity of infrastructure for setting up nodes and utilizing networks. More and more wallets and payment processors continue to grow. Node cloud hosting and node management software companies support BTC’s Lightning payments, enabling enterprises to integrate more into these products and services.”

That said, he conceded that BTC becoming a means of daily payment depends on the asset fulfilling three core conditions: whether its infrastructure is mature enough to achieve low cost and convenient use, whether there is enough use such that large enterprises, institutions and national governments are willing to use the asset and lastly, whether it can deliver a good enough level of security and privacy.

*A pawn shop in the Philippines, a common location for sending and receiving remittances.*

Yohannes Christian, research analyst for digital asset exchange Bitrue, noted that despite being one of the most secure networks in existence today, Bitcoin’s remittance capabilities are one of the worst in terms of speed and fees. He pointed out that the asset can only process 5-7 transactions per second (which works out to 3,500 to 4,000 transactions in a 10-minute block). Furthermore, when this transaction number peaked, Christian noted that it could take up to an hour to settle a payment, adding:

“In terms of fees, the Bitcoin network follows the Supply and Demand Law, with a low of $0.20 per transaction and as high as $50 per transaction during the height of the 2017 bull run. This congestion issue can create a systematic problem for day-to-day Bitcoin payments.”

And, while the development of layer-2 solutions may help solve some of the scalability problems in question, he believes the network still needs some time before it can become ready to be used for daily transactions. To put things into perspective, the Bitcoin network currently has a 10-minute block transaction with only a 1MB block size. In comparison, its close alternative, Bitcoin Cash (BCH), has a 2.5-minute block transaction and 32MB block size, which is 128 times faster than BTC.

The future of Bitcoin lies within a layered approach

Muneeb Ali, CEO and co-founder of Trust Machines — an ecosystem of Bitcoin-centric applications and platform technologies — told Cointelegraph that once you have a decentralized base as good as Bitcoin, it is easy to build additional utility and scalability on top, adding:

“That’s what we’re seeing in other blockchain ecosystems and what we can expect for Bitcoin as well. When it comes to global remittance capabilities Bitcoin presents the strongest capability given its decentralization, long term durability, uptime and accessibility. The remittance can be in BTC, or through stablecoins built on Bitcoin layers.”

Ali said that despite there being a decade worth of Bitcoin development, we’re still in the early innings of the growing ecosystem. This is because building on the Bitcoin ecosystem has traditionally been hard given the base layer was very simple and lacked advanced programming features.

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However, now with various Bitcoin layers like the Lightning Network, Stacks and RSK, developers can build more complex applications with relative ease. “Developer traction is an early indicator of increased app development and usage by mainstream users and we’re beginning to see this now starting 2021 or so,” he concluded.

Therefore, as we head into the decentralized future of digital finance, a growing number of countries, institutions and businesses appear to be willing to use Bitcoin as a settlement currency due to a variety of different factors. However, owing to the fact that BTC still experiences great volatility in its day-to-day price action, it is still limited in its overall scope of usability, especially as a payment medium. Thus, it will be interesting to see how the future of the digital asset plays out from here on end.

‘Token will defeat cryptocurrency’: Russia debuts palladium-backed stablecoin

July 18, 2022 Coin Telegraph

Bank of Russia

Backed by a sanctioned Russian oligarch, Atomyze became Russia’s first legal digital asset manager, obtaining registration from the central bank in February 2022.

The Russian government-backed tokenization platform Atomyze has issued its first digital asset backed by palladium in collaboration with the local bank Rosbank.

Rosbank officially announced on Monday that it became the first partner of the Russian blockchain firm Atomyze, acting as an investor in Russia’s first digital asset deal with palladium.

According to the announcement, the newly issued digital asset is the first digital financial asset (DFA) issued through Atomyze. The platform obtained registration from the Bank of Russia in February 2022, becoming the country’s first legal digital asset manager.

Both Atomyze and Rosbank are backed by Interros, a Russian conglomerate and investment firm co-founded by sanctioned oligarch Vladimir Potanin. The CEO of the Russian nickel and palladium mining and smelting company Nornickel originally announced plans to tokenize palladium back in 2019 through a Switzerland-based palladium fund.

According to an announcement by Interros, Atomyze will serve as a key element of Interros’ digital ecosystem including Potanin’s recently acquired private bank Tinkoff, software engineering firm Reksoft and Rosbank.

“This is a truly significant event. Russian businesses and individuals have the opportunity to invest in this metal,” Potanin said in the announcement. The event also marks Russia’s economy entering a new period, the “era of tokenization,” the oligarch noted.

Potanin also expressed confidence that Atomize-issued digital financial assets like the palladium token will sooner or later displace cryptocurrencies like Bitcoin (BTC), stating:

Unlike cryptocurrencies [...] industrial and other tokens are backed by physical assets, and the use of blockchain technology makes their transactions reliable, convenient and transparent. The token will defeat the cryptocurrency, pushing it to the sidelines of the digital economy.

While both Atomyze or Rosbank refer to the new investment product technically as the “palladium token,” the product has characteristics of a stablecoin backed by precious metals. “The innovative product entitles Rosbank to a cash claim equivalent to the market value of palladium,” the bank said in the announcement.

As previously reported by Cointelegraph, major global stablecoin issuers like Tether and Paxos debuted gold-backed stablecoins a few years ago.

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Coin Telegraph

Mastercard, Visa, PayPal and several others have paved the way for crypto to be used as a tool of payment for buying daily needed goods.

The cryptocurrency market has grown beyond many people’s expectations over the past decade. The nascent industry has managed to change mainstream perception quite significantly, especially in 2021, which saw many traditional financial institutions adopt crypto in one form or another.

Some of the biggest public companies such as MicroStrategy started using Bitcoin (BTC) as a treasury hedge, while the likes of PayPal, Mastercard and Visa paved the way for the common public to use crypto as a form of payment. While many experts are still skeptical about the use of crypto as a form of payment, given its price volatility, recent market trends and data indicate that crypto is increasingly being used to buy daily-use items.

A recent report from fintech payment infrastructure provider checkout.com that surveyed 33,000 business leaders revealed a rise in consumer interest in paying in crypto. The report indicated that 40% of 18–35-year-old consumers want and plan to use cryptocurrencies to pay for goods or services within the next year. That’s up from less than 30% last year.

The rise of digital payments aided by the COVID-19 pandemic has only made it easier for crypto to become more mainstream. People are more familiar with QR code payments today, which makes it easier for mainstream payment processors such as Visa and Mastercard to introduce crypto payments on its network without having to build a separate infrastructure.

Miles Paschini, CEO at fintech bank FV Bank, told Cointelegraph:

“The use of cryptocurrencies as a form of payment has progressed in the past year but primarily into the area of settlement layers, advancements have been made with stablecoins, in particular with USDC and to some extent XRP. The developments we have seen in the settlement layer are not exactly visible to the retail customer. I think we will see more of this type of settlement layer integration in the future as stable similarly similar become more efficient and programmable than traditional settlement systems.”

The growth of crypto payment networks and public interest

According to a report from Visa, its network processed over $1 billion in crypto transactions in the first quarter of 2021, which increased to $2.5 billion by the first quarter of 2022. The report highlighted that crypto payments have become increasingly popular with the rise in the use of stablecoin payments.

Mastercard partnered with USD Coin (USDC) stablecoin issuer Circle to facilitate crypto-based payment options for millions of users.

With the rise in crypto-linked debit cards, Nexo has come up with its crypto collateralized credit card in association with Mastercard. Nexo has issued 55,000 cards since its launch in April that could be used at around 92 million merchants worldwide, allowing investors to spend up to 90% of the fiat value of their crypto.

Antoni Trenchev, co-founder and managing partner of Nexo, told Cointelegraph about the rise of crypto as a form of payment, claiming crypto-linked cards are making it easier for retail customers to spend their digital assets just like fiat. He explained:

“The concept of HODLing is well understood in crypto, but with crypto-backed cards, it is now possible to hodl your digital assets while also using these to spend on day-to-day transactions. This, in turn, has carved a pathway whereby crypto can be both an investment and a form of payment, increasing its utility as an asset class.”

He added, “Crypto cards offer the possibility of spending your crypto directly, which automatically converts your crypto from a linked wallet into the fiat currency needed to pay.”

Many analysts also like to point to the rise in stablecoin adoption as a key metric of crypto payments. Brandon Rochon, a data scientist at Web3 infrastructure provider Covalent, explained how the stablecoin USDC has managed to see over a 10% rise in adoption year-on-year (YoY) despite a downturn in the market. He explained:

“Looking at USDC, its supply grew from $373 million in July 2019 up to $1.0 billion in July 2020, representing a ~168% increase in the one-year time frame. This same 168% growth was achieved in the first three months by October 2020. Over the next year, the supply grew at a rate of 2500% to ~$25 billion, at which point Mastercard stepped in and launched its simplified payments card offering with Circle in July 2021. Since this point, stablecoin supply has continued to grow at a pace over 120% YoY despite the market downturns in the -50%+ range, signifying strong utility.”

Omid Malekan, adjunct professor at Columbia Business School — where he teaches crypto — believes that stablecoin is a fair metric to measure the payment use of crypto at present. He told Cointelegraph:

“One way to measure crypto use in payments is to track stablecoin volumes since those serve a much more limited function than pure crypto coins. On-chain volume for payments has been very strong lately. Most of that is to accommodate speculative activity (people buying and selling crypto, borrowing in DeFi, etc) but payment is a payment, and a substantial part of the traditional system’s payments volume is also related to capital market activity.”

Crypto payments beneficial for merchants and consumers alike

While the infrastructure side of crypto payment has seen tremendous growth, it would not be possible without the willingness of merchants to accept it. Several surveys and reports have highlighted that merchants have benefited equally from the crypto payment integration despite technical barriers and complexities.

Another report from PYMNTS highlighted that more than 75% of the customers in the United States are looking forward to using crypto as a form of payment in 2022. While 85% of businesses with over $1 billion in annual sales are integrating crypto payments to gain more customers, many other merchants have said their overseas transactions increased and they found a new customer base after crypto payment integration.

The key reasons listed by merchants for accepting cryptocurrencies as payments include significant cuts in transaction costs, elimination of middlemen and on-boarding of new customer bases from around the world.

Stablecoins form a significant chunk of expenditure by consumers. However, many analysts also point toward significant growth of layer-2 networks over the past year. For example, the Lightning Network, the secondary layer on top of Bitcoin, has seen tremendous growth over the past year. Bitcoin Lightning Network capacity grew past 4,000 BTC, first breaking the 1,000 BTC barrier in August 2020 and the 2,000 BTC barrier in July 2021. The capacity has doubled in the space of 18 months.

Andry Lebedev, co-founder of Web3 payment infrastructure firm Swipelux, told Cointelegraph:

“At the moment, there is a rerolling of transactions from L1 to L2 thanks to the introduction of zk-rollups and optimistic rollups. Consequently, we see significant growth in transactions for the protocols and stabilization of transactions for Ether and Bitcoin at 125,000 and 240,000 transactions per day, respectively.”

He added that there has been an “upward trend in the structural change of cryptocurrency, which instead of transfer of value becomes a form of payment in the emerging Web3.”

Crypto payment’s popularity depends on the overall adoption of cryptocurrencies; the more people that are aware of and understand the nascent financial asset class, the more people will adopt it, as proven by several studies mentioned above. The volatility aspect of cryptocurrencies could be further dialed down by converting them into stablecoins.

Why is there so much uncertainty in the crypto market right now? | Market Talks with Crypto Jebb and Crypto Wendy O

July 14, 2022 Coin Telegraph

Analysis

Why is there so much uncertainty in the crypto market right now? Join us as we try to figure it out with Tim Warren, co-host of Coffee N Crypto, and Crypto Wendy O

In the fourth episode of Market Talks, we welcome YouTube media creator and crypto educator Crypto Wendy O.

Crypto Wendy O is a YouTube media creator and crypto educator. Wendy became interested in cryptocurrency and blockchain technology in November of 2017. She has been into crypto full-time since the summer of 2018 and focuses on providing transparent marketing & media solutions for blockchain companies globally. Wendy also provides free education via YouTube and Twitter to her growing audience of over 170 thousand, giving her the largest following of any female crypto influencer in the world.

Some of the topics up for discussion with Wendy are the new consumer price index (CPI) numbers and how they might impact the crypto market going forward, and why there is so much uncertainty in the market right now.

As everyone tries to figure out where the Bitcoin (BTC) bottom might lie, we ask Wendy her thoughts on the matter. We also discuss whether Ethereum (ETH) has outperformed BTC during this current bear market and what that might mean for the second largest cryptocurrency.

With more and more crypto platforms filing for bankruptcy, we talk about how much longer the crypto contagion will continue and the best way to safeguard your assets so you don't lose your hard-earned money. Are hardware wallets a better option than keeping your crypto on online exchanges?

Have you been wondering what makes a good investor and trader, and when to get in the market if you haven't already? We ask Wendy for her insights and tips on how you can up your trading game and figure out when might be the best time to get in the market.

Lastly, we discussed whether having diamond hands is always a good strategy or would it be better to constantly take profits as well? We had an insightful conversation about this and also let you in on which altcoins might be a good bet in the current market conditions.

Tune in to have your voice heard. We’ll be taking your questions and comments throughout the show, so be sure to have them ready to go.

Market Talks with Crypto Jebb streams live every Thursday at 12 pm ET (4:00 pm UTC). Each week, we feature interviews with some of the most influential and inspiring people from the crypto and blockchain industry. So be sure to head on over to Cointelegraph’s YouTube page and smash those like and subscribe buttons for all our future videos and updates.

The search term ‘Bitcoin Crash’ is trending — Here’s why

July 13, 2022 Coin Telegraph

Bitcoin Price

The digital gold, aka Bitcoin, has been marked “dead” at least 458 times since 2009. However, BTC proved to be more than alive each and every time.

Last year, the word “crypto” was trending all over the internet as the crypto market was generally flourishing.

However, now it appears that the good fortunes of digital coins havee waned as cryptos have slipped into a serious bear market. Bloomberg recently reported that while the short-term investors wasted no time in dumping their holdings, even the old-timers are now exiting the scene.

The most recent Bitcoin (BTC) crash saw the asset’s price go as low as $17,000, its lowest price since late 2020. Reflecting the general air of uncertainty among investors in the cryptocurrency market, “Bitcoin is Dead” is beginning to trend once again, at least, according to the data from Google Trends.

But, while downturns may generally be a part of crypto markets, things continue to look bleak for crypto.

What triggered the latest Bitcoin crash?

Bitcoin has slipped nearly 70% from its November record high, but it all started in March when CNBC reported that the Federal Reserve approved its first rate hike in three years. That singular act went on to be a major turning point, putting downward pressure on risk assets like Bitcoin. Meanwhile, a series of other events soon followed that also impacted the crash of Bitcoin, including Russia’s invasion of Ukraine and the Terra crash.

Rob Schmitt, chief operating officer of infrastructure provider Toucan, told Cointelegraph:

“A combination of macro headwinds, such as increased interest rates and geopolitical uncertainty, has triggered a broader market downturn that has caused a major delegating event in crypto markets. Specifically, the implosion of Terra and the following insolvency/deleveraging of Celsius and Three Arrows Capital, has forced the liquidation of large amounts of BTC, which caused a price crash.”

First Digital global digital payments firm CEO Vincent Chok insisted on the Luna Classic (LUNC) collapse being the major cause of the crash. He told Cointelegraph:

“This is a part of the normal market cycle. The primary trigger was not geopolitical conflict, but the LUNC collapse and the systemic risks associated with the large exposure to this token.”

The collapse triggered margin calls for hedge funds and defined liquidity positions. Chok added that it’s part of the super cycle of the industry, an evitability of the bull run. Something had to be corrected sooner or later, he added.

Crypto will survive

Bitcoin has been written off as dead at least 458 times in the past. But each of those times, it has managed to come back to life.

Kevin Owocki, founder of Gitcoin DAO — a platform for funding open source Web3 projects — told Cointelegraph:

“Bitcoin has been declared dead hundreds of times in the past and, so far, these commentaries have always been wrong. If the past is any guide, Bitcoin is not dead. I don’t want to get into price forecasts, but my focus has always been on the future of what Web3 can build and how those tools can provide solutions to global problems that humanity faces.”

“We have been through ‘winters’ before where the value of digital assets dropped to uncomfortable levels, but we have seen that the greater crypto community emerges from these periods stronger and more resilient than before. I believe that we will get through this and on the other side the products and assets that have survived will be value generators not just for Web3, but beyond,” Owocki added.

Furthermore, Schmitt also claimed that “a temporary drop in its price does not significantly impact Bitcoin.” He explained how Bitcoin has had to go through multiple larger drops in the past.

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Several other on-chain metrics suggest that Bitcoin will most likely come out of its current situation. One such important metric is the 200-weekly moving average (WMA).

For a long time, the moving average has been a credible indicator of BTC price. Previously, at every point that Bitcoin has hit the 200 WMA, it completely bounced back. A careful look at what happened between 2015 and 2020 in the chart below gives insight into this claim.

Graph showing how Bitcoin surged each time it hit the 200-WMA. Source: TradingView

There are times that Bitcoin dipped slightly below the 200-WMA, but it never stayed there for too long.

So, seeing as Bitcoin is currently trading at a very close range to its 200-WMA, there may be a reason to believe that Bitcoin is not dead. In fact, an upward swing is justifiably expected soon.

The impact of crypto on the economy

Institutional involvement in the crypto market’s last bull cycle has sparked fears that the broader economy may potentially be affected.

Many companies have had to lay off a sizeable number of their employees, and others are looking at potential insolvency. Additionally, a recent Pew Research Center survey found that around 16% of U.S. adults have in one way or another been involved with cryptocurrency. So to an extent, there is a certain amount of national exposure to the current situation of the crypto market.

However, not everyone believes that the crypto market situation will impact the broader economy. In an interview with CNBC, Joshua Gans, an economist at the University of Toronto, said:

“People don’t really use crypto as collateral for real-world debts. Without that, this is just a lot of paper losses. So this is low on the list of issues for the economy.”

Despite the bleak outlook for the crypto market at the moment, crypto continues to see massive adoption across the board. With increased involvement from sports organizations, private individuals, corporate institutions and even states and federal governments, there is a clear trend of crypto adoption.

According to United States-based news outlet Axios, crypto app downloads are improving on a yearly basis, and that should be attributed to higher media coverage. While there was a 64% growth in 2020, last year saw an even more impressive 400% spike in the number of crypto apps downloaded.

Crypto deals with sports brands, teams and leagues increased by more than 100% in 2021 and are expected to reach $5 billion in the next four years.

How long until BTC bounces back?

Going by past trends in the crypto market, the present situation may take weeks, months, or possibly years to reverse, and while the Bitcoin price is suffering at the moment, that should not take away the fact that it is still up 31,437% over the last nine years. In fact, it was currently more than double its price two years ago. Owocki said:

“At Gitcoin Holdings, we know that it may take some time for the general market to recover — but we do not know exactly how long or which assets will recover. It could be five weeks, it could be five years. We are focused on creating value for the long term.”

While there is no exact timeframe as to when Bitcoin will resume an uptrend, it certainly seems that a temporary price drop will ultimately not impact the rapid growth of usage, adoption and prices of crypto assets in the long run.

Owocki believes that the evolution of the internet can be viewed through the lens of the evolution of nature. Instead of natural selection, “we have a market selection.” He said that there was a “Cambrian explosion” of opportunity created by the launch of Bitcoin and multiple forks of BTC.

Recent: A brief history of Bitcoin crashes and bear markets: 2009–2022

Then Ethereum arrived, and a rich ecosystem of layer-2s, decentralized finance, nonfungible tokens, crowdfunding tools, decentralized autonomous organizations and alternate layer-1 networks.

“As this Cambrian explosion works its way through cycles of greed and fear, projects grow and die, and through it, all the heartbeat of innovation continues to pulse. I can’t wait to speed run this evolution until we get to the Web3-equivalent of keystone species like dolphins, humans, forests, or mycelial networks,” Owocki added.

The Gitcoin DAO founder doesn’t think that the BTC or crypto crash is big enough to kill an economy. Throughout history, Owocki added, there have always been bear markets and bull markets. He says that Web3 will emerge on the other side of this stronger, and will contribute even greater value to the world economy than ever before.

A brief history of Bitcoin crashes and bear markets: 2009–2022

July 10, 2022 Coin Telegraph

Bitcoin Price

Bitcoin has historically seen its price down from previous highs for more than three years, and the latest peak took place just seven months ago.

Bitcoin (BTC) experienced one of its most brutal crashes ever in 2022, with the BTC price plummeting below $20,000 in June after peaking at $68,000 in 2021.

June 2022 has become the worst month for Bitcoin since September 2011, as its monthly losses mounted to 40%. The cryptocurrency also posted its heaviest quarterly losses in 11 years.

However, the current market sell-off doesn’t make Bitcoin crashes and bear markets exclusive to 2022. In fact, Bitcoin has survived its fair share of crypto winters since the first Bitcoin block, or the genesis block, was mined back in January 2009.

As we zoom out the Bitcoin price chart, Cointelegraph has picked up five of the most notable price declines in the history of the seminal cryptocurrency.

Bear market No. 1: Bitcoin crash from $32 to $0.01 in 2011

Time to retest previous high: 20 months (June 2011–February 2013)

The Bitcoin price broke its first major psychological mark of $1.00 back in late April 2011 to start its first-ever rally to hit $32 on June 8, 2011. But, the joy didn’t last long, as Bitcoin subsequently plummeted in value to bottom at just $0.01 over the course of a few days.

The sharp sell-off was largely attributed to security issues at the now-defunct Mt. Gox, a Japanese crypto exchange that traded the majority of Bitcoin at the time. The exchange saw 850,000 BTC stolen due to a security breach on its platform, raising major concerns about the security of Bitcoin stored on exchanges.

With BTC losing about 99% of its value in a few days, Bitcoin’s June 2011 flash crash became a big part of Bitcoin history. The event opened a long period before the BTC price recovered to the previous high of $32 and climbed to new highs only in February 2013.

Haha nice #bitcoin crash to 0.01 USD/BTC. http://t.co/jNx8rAr
— Who Knows? ₿⚡️ (@who_knows) June 19, 2011

It’s difficult to track the pre-2013 Bitcoin price when compared to more recent charts. Popular price tracking services and sites like CoinGecko or CoinMarketCap do not track Bitcoin prices before April 2013.

“Bitcoin was very much in its infancy pre-2013 and there were not that many places trading Bitcoin back then,” CoinGecko chief operating officer Bobby Ong told Cointelegraph. He added that CoinGecko has not received many requests for pre-2013 data, so it is low on the priority for the platform.

Bear market No. 2: Bitcoin tanks from $1,000 to below $200 in 2015

Time to retest previous high: 37 months (November 2013–January 2017)

According to BTC price data collected by Cointelegraph, Bitcoin price reached $100 in mid-April 2013 and then continued surging to briefly hit $1,000 in November 2013.

Bitcoin entered a massive bear market shortly after breaking $1,000 for the first time in history, with the BTC price tumbling below $700 one month later. The price drop came as the Chinese central bank began to crack down on Bitcoin in late 2013, prohibiting local financial institutions from handling BTC transactions.

The cryptocurrency continued plummeting over the next two years, bottoming at around $360 in April 2014 and then dropping even further to hit a low of $170 in January 2015.

Bitcoin price chart April 2013–January 2017. Source: CoinGecko

The long cryptocurrency winter of 2014 became associated with the hacked Mt. Gox crypto exchange, which halted all Bitcoin withdrawals in early February 2014. The platform then suspended all trading and eventually filed for bankruptcy in Tokyo and in the United States.

Some major financial authorities also raised concerns about Bitcoin, with the U.S. Commodity Futures Trading Commission claiming that it had power over “Bitcoin price manipulation” in late 2014.

The general sentiment around Bitcoin was mainly negative until August 2015, when the trend started a long-term reversal. Amid the strong bullish market, Bitcoin eventually returned to the $1,000 price mark in January 2017. This was the longest all-time high price recovery period in the history of Bitcoin.

Bear market No. 3: Bitcoin plunges below $3,200 after hitting $20,000 in December 2017

Time to retest previous high: 36 months (December 2017–December 2020)

After recovery to $1,000 in January 2017, Bitcoin continued to rally to as high as $20,000 by the end of that year.

However, similar to Bitcoin’s previous historical peak of $1,000, the triumph of $20,000 was short-lived, as Bitcoin subsequently dropped and lost more than 60% of its value in a couple of months.

The year 2018 quickly became referred to as a “crypto winter” as the Bitcoin market continued shrinking, with BTC bottoming at around $3,200 in December 2018.

The crypto winter kicked off with security issues on Coincheck, another Japanese cryptocurrency exchange. In January 2018, Coincheck suffered a gigantic hack resulting in a loss of about $530 million of the NEM (XEM) cryptocurrency.

The bear market further escalated as tech giants like Facebook and Google banned ads for initial coin offerings and token sales ads on their platforms in March and June 2018, respectively.

Global crypto regulation efforts contributed to the bear market as well, with the U.S. Securities and Exchange Commission rejecting applications for BTC exchange-traded funds.

Bitcoin price chart December 2017–December 2020. Source: CoinGecko

Bear market No. 4: BTC slumps from $63,000 to $29,000 in 2021

Time to retest previous high: six months (April 2021–October 2021)

Bearish sentiment dominated the crypto market until 2020, when Bitcoin not only came back to $20,000 but entered a massive bull run, topping at higher than $63,000 in April 2021.

Despite 2021 becoming one of the biggest years for Bitcoin, with the cryptocurrency passing a $1 trillion market cap, Bitcoin also suffered a slight drawback.

Shortly after breaking new all-time highs in mid-April, Bitcoin drew back slightly, with its price eventually dropping to as low as $29,000 in three months.

The mini bear market of 2021 came amid a growing media narrative suggesting that Bitcoin mining has a problem related to environmental, social and corporate governance (ESG).

The global ESG-related FUD around Bitcoin had been exacerbated even further with Elon Musk’s electric car firm Tesla dropping Bitcoin as payment in May, with the CEO citing ESG concerns. Just three months later, Musk admitted that about 50% of Bitcoin mining was powered by renewable energy.

The cycle of FUD pic.twitter.com/OC8kGXAUSd
— Lina Seiche (@LinaSeiche) June 20, 2021

The bear market didn’t last long despite China starting a major crackdown on local mining farms. The bullish trend returned by the end of July, with Bitcoin eventually surging to its still-unbroken all-time high of $68,000 posted in November 2021.

Bear market No. 5: Bitcoin plummets from $68,000 to below $20,000 in 2022

Time to retest previous high: to be determined

Bitcoin failed to break $70,000 and started dropping in late 2021. The cryptocurrency has slipped into a bear market since November last year, recording one of its biggest historical crashes in 2022.

In June, the cryptocurrency plunged below $20,000 for the first time since 2020, fueling extreme fear on the market.

The ongoing bear market is largely attributed to the crisis of algorithmic stablecoins — namely the TerraUSD Classic (USTC) stablecoin — which are designed to support a stable 1:1 peg with the U.S. dollar through blockchain algorithms rather than equivalent cash reserves.

USTC, once a major algorithmic stablecoin, lost its dollar peg in May. The depegging of USTC triggered a massive panic over broader crypto markets as the stablecoin had managed to become the third-largest stablecoin in existence before collapsing.

The collapse of Terra caused a domino effect on the rest of the crypto market due to massive liquidations and uncertainty that fuelled a crisis in cryptocurrency lending. A number of global crypto lenders like Celsius had to suspend withdrawals due to their inability to maintain liquidity amid brutal market conditions.

Bitcoin has historically seen its price trade below previous highs for more than three years. The previous peak of $68,000 took place just seven months ago, and it’s yet to be seen whether and when Bitcoin would return to new heights.

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