There are of course many factors involved in Bitcoin’s price discovery over the long term. The ones I focus exclusively on here is how accessibility of buying the asset has played a very significant role on its price performance over the short term. The three major events that stood out to me were the start of Mt. Gox, Coinbase, and most recently, the new 9 spot bitcoin ETF’s.
Mt. Gox March 2010 — Bitcoin’s First Public Exchange
In the early days, Bitcoin was mainly a cypherpunk project; a libertarian pipe dream of separating money from state. Since it was new and obscure, the act of actually obtaining Bitcoin was a complex process involving sketchy wiring instructions to foreign countries, peer-to-peer transactions or actually mining for it. There was no streamlined process or online marketplace to easily exchange fiat for Bitcoin.
Because of the complexity of buying and securing Bitcoin during these days, the total addressable market of Bitcoin was very small, in the 10s of millions. It wasn’t until Mt. Gox, the first Bitcoin exchange, that the adoption rate kicked up an order of magnitude to the hundreds of millions of dollars. Despite the disastrous ending to this exchange, they were a major part of the next adoption phase in 2010/2011 as it provided a significantly easier way to buy bitcoin.
Bitcoin first started trading March 17th of 2010 on Mt. Gox and the price proceeded to go from a fraction of 1 cent to just under $2 in 13 months without any prolonged price correction. Not only that, but Bitcoin never traded within that range ever again (see below):
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As important as Mt. Gox was, at the end of the day it was a terrible Bitcoin exchange. It was first of its kind, based in Japan with questionable regulatory compliance. The user interface was terrible and geared towards experienced traders and no one who wasn’t deep into the Bitcoin space would ever feel comfortable sending money to them (ultimately those people were proven right).
Coinbase June 2012 — Bitcoin Comes to Retail
Then came Coinbase in June of 2012. This was a US based exchange, proactive in staying compliant with rules and regulations around crypto and prioritized their user interface for the retail investor. Coinbase was the first legitimate exchange based in the US. Suddenly, just about anyone who was capable of setting up an account was easily able to buy Bitcoin. This once again increased Bitcoin’s addressable market from hundreds of millions of dollars to trillions as the retail sector began to enter the space.
Over the next 9 months, Bitcoin proceeded to trade up from $10 to $75 without any prolonged price correction and Bitcoin never traded within that range ever again (see below):
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ETF Approvals — Bitcoin Becomes Globally Accessible
The point of this article is very simple - the infrastructure and accessibility around Bitcoin is continuously improving and each new and improved way to access this asset has been met with rapid price appreciation.
In January of 2024, 9 spot bitcoin ETFs were approved and began trading on the NYSE. Just like Mt. Gox and Coinbase, this brings Bitcoin’s total addressable market up orders of magnitude from trillions of dollars to hundreds of trillions as basically every person, company, and institution now has the ability to buy this asset. There is no technological hurdle to buying bitcoin anymore; it is traded on the biggest stock market in the world and being marketed by the biggest and most trusted financial institutions (Blackrock, Fidelity, etc).
There is a significant chance that the approval of these ETFs will precede a price run up very similar to the ones we saw post Gox and Coinbase. Those who wait on the sidelines over the next 12 months will watch as Bitcoin goes to $200k+ and never return. If price action were to follow something similar to the Coinbase launch, the next couple years would look something like this:
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Keep stacking sats.
Contents are for informational purposes only. Cyber Hornet Financial is not an investment advisor and does not provide tax, legal, or investment advice. Prior to integrating Bitcoin as part of a cash balance strategy, please seek the advice of a qualified and appropriately registered professional.