Bitcoin 12-Year Development History: Institutions Getting on Board Strengthen Value Consensus, Fluctuation Still the Focus of Attention

Bitcoin, as a decentralized blockchain currency, has been around for 12 years since its inception in 2009. Its emergence stems from a distrust of the traditional centralized monetary system, especially after the financial crisis. As noted by a well-known financial institution, a phenomenon that has sustained for 12 years cannot simply be regarded as a bubble.

Recently, the value consensus of Bitcoin has been widely recognized. At the beginning of 2021, the price of Bitcoin hit new highs, breaking the $40,000 mark on January 8th, reaching an all-time high of $41,940. In just over a month, its value more than doubled. This continuous upward trend has greatly invigorated the cryptocurrency market.

However, the price of Bitcoin remains highly volatile. As of January 20, the price of Bitcoin fluctuates around $35,000. This volatility is partly due to the decentralized and anonymous nature of Bitcoin, which results in relatively loose market constraints. Data shows that the daily average volatility of Bitcoin is 3.75%, and it experienced a single-day drop of over 50% on March 12, 2020.

Compared to the bull market in 2017, a significant feature of the current round of price increases is the massive entry of institutional investors. Data shows that there were multiple transfers of Bitcoin worth over $100 million as early as the beginning of January 2021. Between January 11 and 15 alone, 65 large transfers were monitored, among which the total amount of transfers between 19 anonymous wallets reached 92201 Bitcoins, with a market value of approximately $3.5 billion.

Currently, only 0.00695% of Bitcoin addresses hold 42.5% of the Bitcoin. This structural change indicates that institutional investors are becoming an important force in influencing the development of the Bitcoin market alongside long-term holders. This further consolidates the value consensus of Bitcoin.

The core attributes of Bitcoin are its security and scarcity. In terms of security, the design of Bitcoin is aimed at enhancing the trust mechanism from the underlying logic to each component. Theoretically, only by controlling more than 51% of the computing power can one crack the Bitcoin system, and countless attack attempts over the past 12 years have proven its security.

In terms of scarcity, the total supply of Bitcoin is capped at 21 million, and mining is expected to stop by the year 2140. This artificially set scarcity makes Bitcoin a unique digital asset. It is estimated that around 3.7 million Bitcoins have already permanently disappeared due to lost private keys, further increasing the scarcity value of the existing Bitcoins.

The high volatility of the Bitcoin market is partly due to its trading anonymity and decentralization features. Unlike traditional financial markets, the Bitcoin market has no price limits or circuit breaker mechanisms, making its price more susceptible to direct market forces.

Currently, mainstream Financial Institutions have significant differences in their views on Bitcoin, ranging from strong opposition to extreme support. Some believe that regulation will determine the fate of Bitcoin, while others predict that stablecoins may replace Bitcoin. However, the 12-year existence of Bitcoin itself is a strong proof. Although external factors may have a significant impact on Bitcoin, these effects are more likely to highlight Bitcoin's value rather than cause its value to drop to zero.