Since its birth, Bitcoin has experienced several significant bull markets:

2013 Bull Market

1. Background and Early Development

• After the birth of Bitcoin in 2009, it was mainly the focus of technology enthusiasts and a small number of geeks in the early days. By 2013, as the concept of Bitcoin gradually spread, more people began to understand this emerging digital currency.

• At this time, Bitcoin has aroused widespread discussion in some online communities and technology forums. Its decentralization, anonymity and other characteristics have attracted people who have doubts about the traditional financial system.

2. Price increase process

• In early 2013, the price of Bitcoin was still relatively low, around $13. Then, due to the outbreak of the Cyprus debt crisis, local banks faced difficulties, and people began to seek Bitcoin, an asset that is not controlled by the traditional financial system, as a hedge. This event pushed the price of Bitcoin to rise.

• By April 2013, the price of Bitcoin exceeded $100, the first time the price of Bitcoin reached three digits. After that, the Chinese market's interest in Bitcoin increased significantly, and a large number of Chinese investors began to pour into the Bitcoin market, further driving up the price.

• By November 2013, the price of Bitcoin broke through the $1,000 mark and reached an all-time high (at the time) of $1,242.

3. Market characteristics

• Influx of new investors: Many investors who originally did not know about Bitcoin, including some ordinary people and small investors, began to pay attention to and participate in Bitcoin transactions.

• Media attention: Bitcoin has received extensive coverage from major media outlets, which has increased its popularity and attracted more investors.

• Technological development: In 2013, the relevant technical infrastructure of Bitcoin continued to develop, such as the improvement of Bitcoin wallets and the establishment of more trading platforms, providing better conditions for Bitcoin transactions.

2017 Bull Market

1. Background and market development

• During the period of 2013-2017, the technology of Bitcoin continued to develop, and the application potential of its blockchain technology was recognized by more people. At the same time, although the regulation of cryptocurrencies exists worldwide, it has not yet been fully tightened.

• More and more startups are beginning to get involved in the Bitcoin and blockchain fields, driving the popularity of Bitcoin.

2. Price increase process

• At the beginning of 2017, the price of Bitcoin was around $1,000. As time went on, countries such as Japan began to recognize Bitcoin as a means of payment, and this policy-level recognition had a positive impact on the Bitcoin market.

• Institutional investors began to pay attention to Bitcoin, and some venture capital companies began to invest in Bitcoin-related projects. In addition, the launch of Bitcoin futures also provided investors with more investment tools.

• In December 2017, the price of Bitcoin reached an all-time peak of nearly $20,000, an increase of nearly 20 times compared to the beginning of the year.

3. Market characteristics

• Global investor participation: This bull market has attracted investors from different regions around the world, including Asia, Europe, and North America. Investors in Asia, especially China and South Korea, are enthusiastic about Bitcoin.

• ICO (Initial Coin Offering) craze: 2017 was also the year when ICO became popular. Many new cryptocurrency projects raised funds through ICO, which also drove the demand for Bitcoin to a certain extent, because Bitcoin is one of the main means of payment for ICO projects to raise funds.

• Market frenzy: Market sentiment is extremely frenetic, the media is full of news about Bitcoin, many investors enter the market with the mentality of getting rich quick, and FOMO (fear of missing out) is very common.

2020-2021 Bull Market

1. Background and market development

• In 2020, the world encountered the COVID-19 crisis, and countries implemented large-scale fiscal stimulus and monetary easing policies to cope with the impact of the epidemic. In this macroeconomic environment, investors seek new assets to preserve and increase their value, and some investors begin to pay attention to Bitcoin.

• At the same time, the infrastructure of Bitcoin has been further improved, and the acceptance of Bitcoin by payment companies, financial institutions, etc. has gradually increased. For example, some large payment companies have begun to allow merchants to accept Bitcoin payments, providing support for the expansion of Bitcoin's application scenarios.

• There has been a significant shift in the attitude of institutional investors towards Bitcoin. Previously, institutional investors were mostly cautious about Bitcoin, but during this period, many large financial institutions began to consider Bitcoin as an emerging asset class and include it in their investment portfolios.

2. Price increase process

• At the beginning of 2020, the price of Bitcoin was around $7,000-8,000. As economic uncertainty caused by the epidemic increased, the price of Bitcoin began to rise steadily.

• In December 2020, the price of Bitcoin surpassed $20,000, the first time it had broken this important mark since 2017. The price continued to rise after that.

• By April 2021, the price of Bitcoin reached an all-time high of nearly $65,000. During this rise, the market value of Bitcoin also expanded rapidly, and its influence in the global financial market continued to grow.

3. Market characteristics

• Institutional dominance: Unlike previous bull markets, institutional investors played a leading role in this bull market. Well-known companies such as Tesla announced the purchase of Bitcoin as a company asset, and many hedge funds and asset management companies also increased their investment in Bitcoin. This has greatly increased the scale of funds in the Bitcoin market and also increased the recognition of Bitcoin in the traditional financial field.

• The rise of DeFi (decentralized finance): DeFi projects flourished on blockchains such as Ethereum during 2020-2021. Although DeFi is mainly based on other blockchains such as Ethereum, its rise has also brought more attention and capital inflows to the entire cryptocurrency market, indirectly driving up the price of Bitcoin, as Bitcoin still occupies an important position in the cryptocurrency ecosystem and is a bellwether for the cryptocurrency market.

• Regulatory attention and controversy: With the sharp rise in Bitcoin prices, regulators in various countries have paid more attention to Bitcoin. Some countries have begun to consider formulating stricter regulatory policies, while others are exploring how to promote the development of cryptocurrencies while regulating. This regulatory uncertainty coexists with the rise of the market, adding a special color to this bull market.

Adjustments and impacts after the bull market

1. Price Adjustment

• After each Bitcoin bull market reaches its peak, it is often accompanied by a dramatic price adjustment. For example, after reaching a high of $1,242 in November 2013, the price of Bitcoin fell rapidly, and by January 2015, the price had fallen to around $200. This is mainly because the price rose too fast in the previous period, and there was a large amount of speculative bubble in the market. When market sentiment changed or external adverse factors emerged, the bubble burst and the price fell sharply.

• After reaching nearly $20,000 in December 2017, Bitcoin entered a long bear market in 2018, with prices continuing to fall to as low as over $3,000. During this process, the price of Bitcoin shrank significantly due to factors such as the previous market over-enthusiasticism, the bursting of the ICO bubble, increased regulatory pressure, and the market's re-examination of the value of cryptocurrencies.

• After reaching a high of nearly $65,000 in April 2021, the price of Bitcoin has also experienced volatile adjustments. Changes in the regulatory environment, China's restrictions on Bitcoin mining and trading, and the market's own cyclical factors have all contributed to the price decline. By the end of 2022, the price of Bitcoin had fallen below $17,000.

2. Impact on the market ecology

• Adjustment of technology development direction: The rapid development of Bitcoin during the bull market attracted a large number of technical talents and funds to invest in the field of cryptocurrency. In the adjustment period after the bull market, the development focus shifted from simply pursuing price increases and market speculation-related applications (such as some ICO projects that are only for speculation) to focusing more on the improvement of underlying technologies, such as Bitcoin expansion solutions, increasing transaction speeds and reducing handling fees.

• Changes in market structure: Adjustments after each bull market will lead to changes in the market structure. Some weak cryptocurrency projects and trading platforms will find it difficult to survive in a bear market and will be eliminated, while those with strong technical strength and a stable user base will be able to optimize and innovate during the adjustment period to further consolidate their market position. For example, some large and well-compliant cryptocurrency trading platforms will be more competitive in subsequent market development by strengthening security measures and expanding their business scope in a bear market.

• Further clarification of regulation: The crazy rise of Bitcoin during the bull market often prompts regulators in various countries to speed up the formulation and improvement of relevant regulatory policies. In the adjustment period after the bull market, regulatory policies will be clearer and more detailed. Some countries may strengthen supervision of cryptocurrency trading, mining and other activities, while others may explore how to reasonably develop beneficial applications of blockchain technology under the regulatory framework, which will also help the entire cryptocurrency market move from chaos to order and gradually mature.

The development law of Bitcoin market from the historical bull market

1. Relationship with the macroeconomic environment

• In these historical bull markets, we can see that Bitcoin prices have a certain relationship with the macroeconomic environment. For example, when the global economy faces a crisis (such as the Cyprus debt crisis in 2013 and the COVID-19 crisis in 2020), Bitcoin is sometimes seen as a safe-haven asset or a tool that can hedge risks in the traditional financial system. However, this correlation is not completely stable, because the Bitcoin market is also affected by many factors such as its own characteristics and investor sentiment.

• Monetary policy also has an impact on the bull market of Bitcoin. When central banks implement loose monetary policies, the money supply in the market increases, inflation expectations rise, and some investors will use Bitcoin as an option to fight inflation. This is more obvious in the bull market of 2020-2021. Many investors believe that the limited supply of Bitcoin (a total of 21 million coins) gives it anti-inflation properties similar to gold.

2. Mutual promotion of technological innovation and market acceptance

• Bitcoin’s technological innovation has played a key role in driving the bull market. For example, the continuous development and improvement of blockchain technology has improved Bitcoin’s security, scalability, and other aspects. Each technological advancement will attract more investors and developers to enter this field, thereby driving up Bitcoin prices.

• At the same time, the improvement of market acceptance will also accelerate technological innovation. As Bitcoin is accepted as a means of payment by more merchants and recognized as an asset class by more financial institutions, its application scenarios continue to expand. This requires Bitcoin to be able to meet more diverse needs in terms of technology, such as faster transaction confirmation speed, lower handling fees, etc., thereby promoting further innovation in Bitcoin-related technologies.

3. Evolution of investor psychology and market sentiment

• During the Bitcoin bull run, investor psychology and market sentiment have undergone a significant evolution. In the early stages of a bull run, it is often a small number of early adopters and technology enthusiasts who begin to pay attention to Bitcoin’s technological potential and invest. As prices rise, more and more investors are attracted, and FOMO (fear of missing out) gradually spreads.

• In the late stage of the bull market, market sentiment becomes extremely enthusiastic, and investors tend to ignore risks and overly optimistically believe that the price of Bitcoin will continue to rise indefinitely. This excessive expansion of sentiment eventually leads to the formation of a market bubble, and once negative factors appear (such as regulatory news, technical problems, etc.), market sentiment will quickly reverse from enthusiasm to panic, causing a sharp drop in prices.

4. Impact of the regulatory environment

• Bitcoin's historical bull market is always accompanied by changes in the regulatory environment. During the bull market, regulators are often in a state of catching up, trying to understand and regulate this emerging market. Early regulation was relatively loose or there were regulatory gaps, which provided a certain space for the rapid development of Bitcoin.

• However, as the Bitcoin market has grown in size and influence, regulators have begun to strengthen supervision. Regulatory measures can directly affect the market supply and demand of Bitcoin. For example, some countries ban Bitcoin transactions or restrict Bitcoin-related businesses, which will reduce market demand and lead to price drops; while some countries recognize the legal status of Bitcoin or formulate a reasonable regulatory framework, which may increase market stability and investor confidence, and is conducive to the long-term development of Bitcoin.