The 12-Year Development History of Bitcoin: From the Financial Crisis to Institutional Investor Dominance

Bitcoin, as a decentralized blockchain currency, was born after the financial crisis in 2009. It was proposed by Satoshi Nakamoto and aims to address some of the flaws of traditional centralized currencies like the US dollar. After 12 years of development, Bitcoin has become a financial phenomenon that cannot be ignored. As stated by a major bank, something that has been continuously developing for 12 years cannot simply be regarded as a bubble.

The value consensus of Bitcoin is continuously expanding. At the beginning of 2021, the Bitcoin market performed particularly well. On January 8, the price of Bitcoin broke through the $40,000 mark, reaching a historical high of $41,940, more than doubling compared to a month ago. A week later, on January 15, Bitcoin touched $40,000 again. This sustained performance of hitting new highs has greatly invigorated the cryptocurrency market.

According to market data, as of January 20, the price of Bitcoin is around $35,000. This price fluctuation is expected and aligns with the characteristics of the Bitcoin market. Due to its Decentralization and anonymity, the fluctuation range of the Bitcoin market is usually large. Data shows that the daily average volatility of Bitcoin is 3.75%. It is worth noting that on March 12, 2020, Bitcoin experienced an extreme situation with a single-day decline of over 50%.

The participation of institutional investors has become an important factor in stabilizing the Bitcoin market. Unlike the bull market in 2017, which was mainly driven by retail investors, the new round of increases that began at the end of 2020 has been more driven by institutional investors.

Data shows that in January 2021, there were multiple large Bitcoin transfers. Between January 11 and 15 alone, 65 large transfers were detected, among which 19 were transfers between anonymous wallet addresses, totaling 92,201 Bitcoins, worth approximately $3.5 billion.

As of January 15, 2021, there are 100 Bitcoin addresses worldwide with a balance of over 10,000 BTC, which control 13.6% of the circulating Bitcoin. If we include addresses holding 1,000-10,000 BTC, then 0.00695% of Bitcoin addresses globally own 42.5% of the Bitcoin. This indicates that the holding structure of Bitcoin is changing, with institutional investors and large holders becoming an important force in the market.

The core attribute of Bitcoin is the source of its vitality. First is security; Bitcoin's design strengthens the trust mechanism from its underlying logic to all its components. Theoretically, only by controlling more than 51% of the computing power can the system be compromised. Over the past 12 years, Bitcoin has withstood countless attacks, which itself is the best proof of its security.

Secondly, there is scarcity and non-replicability. The total supply of Bitcoin is limited to 21 million, and mining is expected to stop by 2140. This artificially set scarcity makes Bitcoin a unique digital asset. It is worth noting that approximately 3.7 million Bitcoins (about 20% of the circulating supply) are considered permanently lost due to reasons such as lost private keys, which further increases the scarcity value of the existing Bitcoins.

The high volatility of the Bitcoin market stems from its anonymity and decentralization characteristics. Unlike traditional financial markets, Bitcoin transactions are not subject to price limits or circuit breaker mechanisms, making the market more susceptible to various factors.

Currently, mainstream financial institutions have shown a clear divergence in their attitudes towards Bitcoin. Some are concerned that regulatory policies may affect the development of Bitcoin, while others believe that stablecoins may replace Bitcoin's position. However, these views are still open to discussion.

Bitcoin has existed for 12 years, and time is the best test. Although external factors may have a significant impact on Bitcoin, these impacts more often highlight the value of Bitcoin rather than determine whether it will go to zero. The future of Bitcoin will continue to spark discussions and controversies, but its status as an innovative financial tool can no longer be ignored.