What’s Up With Bitcoin, Anyway?
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8
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Jan 17, 2025
Here’s a meme: a man filmed his reaction to the price of Bitcoin in 2013 ($100) and then recreated it eleven years later when it reached $100K.
Funny to some, nostalgic to others, it nonetheless raises the question: how could the value of something multiply a thousandfold in only a decade? Is there a logic to the evolution of the world’s most popular cryptocurrency or was it made just to make you regret not listening to your hooded dual-monitor friend back then?
What’s going on? Where is it going? Allow me to try and answer those questions!
Current Situation
Bitcoin dominates the present landscape as the most valuable and widely recognized digital asset. As of January 15, 2025, its price stands at approximately $99K USD, with a robust market capitalization around $1.88 trillion. Its unique characteristics, which include being a decentralized, deflationary asset, make it a nontraditional financial instrument.
Several factors contribute to Bitcoin's price dynamics, chief among them supply and demand. The supply limit of 21 million coins ensures that it remains a scarce resource, and as adoption grows, this scarcity exerts upward pressure on its price. Market sentiment also plays a crucial role, with price swings influenced by investor optimism or fear.
2024
Last year was huge for Bitcoin. The approval of ETFs by the U.S. Securities and Exchange Commission in January gave it further mainstream legitimacy, opening doors to more potential investors. The surge in demand pushed Bitcoin's price above the $100,000 mark for the first time in its history, albeit briefly.
In April, Bitcoin underwent its scheduled halving event. This process, which is embedded in its protocol, occurs approximately every four years, reduces the rewards miners receive for validating transactions and cuts in half the rate at which new Bitcoins enter circulation. It’s important to note that halvings have always served as catalysts for price increases. While the full impact of last year’s is expected to unfold in the next few months, it has already strengthened Bitcoin as a scarce and valuable asset.
Geopolitical endorsements shaped the narrative around Bitcoin in 2024 too. Statements from influential leaders, like Vladimir Putin, put into perspective its utility as a financial tool capable of bypassing traditional sanctions. Regions grappling with economic or political instability are among Bitcoin’s most willing adopters and this won’t change anytime soon.
The regulatory landscape shifted significantly as well, particularly with the election of Donald Trump in November. His pro-crypto stance inspired enthusiasm about the future of Bitcoin in the United States, with discussions surrounding a potential "Bitcoin Act" and the establishment of digital national reserves. A version of this is also in talks in Brasil, which has its own bank-issued digital currency (CBDC), while El Salvador, already ahead of the game, has just increased its national reserves to 6022.18 BTC, approximately $580 million.
2025
Historical data suggests that Bitcoin often experiences considerable price increases approximately a year after a halving event. Many analysts predict that the cryptocurrency could reach or even surpass its previous all-time high, with some speculating over $150,000.
Institutional interest is likely to remain a driving force. The success of Bitcoin ETFs has created opportunities for further adoption, with financial organizations and corporate treasuries continuing to integrate Bitcoin into their portfolios. This could stabilize Bitcoin's price at higher levels.
Bitcoin's appeal as a hedge against inflation and currency instability will probably keep growing, particularly in emerging markets. However, challenges in adoption as a medium of exchange might also remain. Unless technological advancements, such as improved scalability through the Lightning Network, become widespread, Bitcoin's utility beyond a store of value could remain limited.
Quantum Computing
Bitcoin relies on algorithms like SHA-256 and ECDSA to secure its transactions and wallets. The recent Google unveiling of the "Willow" quantum chip made some imagine a potential future in which quantum computing renders these algorithms obsolete, making it possible to forge signatures or alter transaction histories. Developing emergency solutions for this would be a monumental task, requiring consensus among developers, miners, and users. Funds would need to be migrated to new, quantum-secure addresses, which could be fraught with technical and logistical issues.
However, while impressive, Willow is currently nowhere near capable of compromising Bitcoin’s security. It has only 105 qubits, and a quantum computer would need more than 13 million qubits to break Bitcoin’s encryption. The gap is massive — 23,800-fold — making this threat decades away at best.
The quantum threat is not new. In fact, Satoshi Nakamoto, Bitcoin’s mysterious creator, predicted it in 2010. He even outlined a contingency plan to upgrade Bitcoin’s cryptography if necessary. Bitcoin has already shown a proven track record of evolving past threats. Key upgrades like SegWit (2017) helped mitigate scaling issues and eliminated transaction malleability. In 2021, Taproot introduced enhanced privacy features and the foundation for smart contracts. Each of these upgrades made Bitcoin more secure and adaptable.
Today, Bitcoin developers are already working on quantum-resistant solutions. These efforts include SPHINCS+ (a quantum-proof signature scheme), lattice-based cryptography, hash-based signatures, and zero-knowledge proof layers. Developers are also testing quantum-resistant address formats and emergency migration protocols on Bitcoin’s testnet. These improvements can be thought of as upgrading the locks and walls of a castle — making it stronger without disrupting the people inside. The upgrades will be seamless, allowing users to continue using the service without interruptions.
By the time quantum computers become a real threat, Bitcoin will have already adapted and strengthened its defenses, making it even more secure than traditional financial systems. Bitcoin funds, it turns out, may be safer than a bank account, quantum computers or not.
Investment Advice
One way to navigate Bitcoin’s volatility is to understand its cyclical nature. According to recent research into its price movements, the cryptocurrency appears to follow “spiral cycles”—recurring fractals that repeat across different timeframes. These cycles, first identified by analysts studying long-term price trends, suggest that Bitcoin’s major peaks and troughs are part of predictable patterns. Recognizing these patterns can help investors avoid panic during downturns and remain patient through the inevitable corrections.
Diversification is the cornerstone of any investment strategy. Rather than placing all capital in Bitcoin, it’s advisable to spread investments across a range of assets, including traditional equities, bonds, and alternative cryptocurrencies. Staying informed about market trends, regulatory developments, and technological advancements is also recommended.
Bitcoin tends to reach new highs after each major correction, often following its spiral cycle patterns. As I said previously, while short-term price swings may be dramatic, Bitcoin has historically rewarded those who weather the storm. However, it’s vital to invest only what you can afford to lose, as the market is unpredictable. Bitcoin ETFs offer a safer and regulated avenue for exposure to Bitcoin without the complexities of managing private keys or resorting to unregulated exchanges.
Conclusion
Bitcoin's journey through 2024 underscores its resilience and adaptability in a complex and ever-changing financial landscape. Historical breakthroughs, the approval of ETFs, geopolitical endorsements and the halving event reinforced its growing significance. 2025 could be a year marked by deeper adoption by organizations, further regulatory developments, and advancements in safety that address emerging concerns.
An exciting development on the horizon is the exploration of zero-knowledge (ZK) proofs as a potential layer-2 solution. StarkWare, a leader in ZK technology, recently hinted at the possibility of bringing ZK-rollups to Bitcoin, which could significantly enhance its scalability and privacy. These are part of a broader trend of ongoing innovation aimed at ensuring the cryptocurrency remains secure, efficient, and adaptable.
For investors, understanding these dynamics and maintaining a balanced strategy is essential. Whether as a store of value, a hedge against inflation, or a speculative asset, Bitcoin embodies both the promise and the perils of the digital age. It’s a constantly adapting entity, reflecting the increasing demands of a digital-first economy.
Now that you know more about Bitcoin, it doesn’t seem that far-fetched that its price went from $100 to $100.000 in 11 years. My hope after reading this article is that you’ll find yourself more excited about becoming a player in the crypto space. You can always reach out to me or contact SpaceDev for advice and best practices in this regard.
