Since its inception, Bitcoin has experienced several dramatic price swings, with four episodes widely recognized as classic bubbles—where the price exploded after a gradual rise, crashed sharply, and eventually settled at a level above the pre-bubble base. Bitcoin.com's deep dive in early 2017 examined these historical events and explored the timing of the next potential bubble.
The First Spike: July 2010
Bitcoin's first notable price spike occurred on July 12, 2010, on the first Bitcoin exchange, "The Bitcoin Market." The trigger was a Slashdot article about Bitcoin version 0.3, drawing a flood of new users. Within five days, the price jumped tenfold from $0.008 to $0.080 per BTC. Shortly after, Mt.Gox launched, and the price quickly stabilized around $0.06 per BTC.
"The Great Bubble of 2011"
On June 8, 2011, Bitcoin reached a new high of $31.91 on Mt.Gox, widely attributed to the rising popularity of the Silk Road darknet marketplace. However, the peak was short-lived; the price collapsed by over 93% over the next four months, entering a prolonged downtrend.
April 2013 Bubble
On March 18, 2013, the U.S. Financial Crimes Enforcement Network (FinCEN) issued guidance on digital currencies. The next day, Bitcoin version 0.8 was released, followed by the Internet Archive beginning to accept Bitcoin. This drove the price above $30 and Bitcoin's market cap to a new high of $1 billion. Amid the Cyprus banking crisis, the price surged past $100 for the first time on April 10, 2013, peaking at $266 on Mt.Gox. The price then crashed below $60 before gradually recovering to the $120+ range.
November 2013 Bubble: All-Time High
Behind the scenes, Mt.Gox CEO Mark Karpeles had been running trading bots "Willy" and "Marcus" that faked volume, fueling rampant speculation. On November 28, 2013, Bitcoin skyrocketed to an all-time high of $1,242 on Mt.Gox. Users soon discovered they could not withdraw funds, and the Mt.Gox price dwindled to zero throughout February 2014. Unlike previous bubbles, multiple major USD exchanges (Bitstamp, Bitfinex, BTC-e) were operating. Their prices took a hit but never returned to pre-bubble lows: Bitstamp's peak was $1,163, and the price did not fall below $400.
When Is the Next Bubble?
General Motors BI Developer Mike Casey Sr. published a detailed blog post analyzing Bitcoin bubbles. He argued that Bitcoin bubbles largely follow the "Gartner Hype Cycle" because Bitcoin investment is almost entirely speculative, and speculation is driven by hype. Comparing price charts to fractal mathematics and the S-curve, Casey noted that the pattern between the April 2013 spike and the November 2013 spike mirrored the pattern from the November 2013 spike to the present on a smaller scale. He hypothesized that the next spike would take a similar form. Casey observed that the price was gradually climbing back toward the old high. "Once the price reaches a sustained level of 80–90% of the old peak, the bubble cycle typically starts over again with another bull run," he wrote. After thorough analysis, he predicted one more plateau, likely around $900. His final speculation: "At present, all technical indications are that we are several months away from a new hype cycle and bull run."
Note: This article is based on material originally published in January 2017 when Bitcoin was trading below $1,000. Hindsight shows that the historical pattern of bubbles has indeed repeated multiple times since.