The price swings of cryptocurrencies like bitcoin have captivated investors and onlookers alike.
In a recent interview, Neil Bergquist, founder and CEO of crypto exchange Coinme, discussed crypto price movements from a perspective that may surprise casual observers. While acknowledging crypto’s reputation for price swings, he noted that a longer-term view reveals a different pattern.
“It’s volatile, but what’s interesting is if you zoom back, yes, it goes up and down, but when it goes into a down cycle, into a trough, its low is higher than its previous low,” Bergquist explains. “If you look at the lowest price of bitcoin in any given year, it’s almost always higher than the low of the prior year.”
Bitcoin’s Long-Term Trend Features Higher Yearly Lows
This more-sustained “higher lows” phenomenon can sometimes be overlooked in breathless media coverage of crypto’s latest price spikes or crashes. Yet it points to a more nuanced reality of bitcoin’s price trajectory over its now nearly 15-year history.
A look at bitcoin’s approximate yearly lows over the last decade shows a clear upward trend:
2015: $200
2016: $350
2017: $800
2018: $3,200
2019: $3,300
2020: $3,800
2021: $29,000
2022: $15,600
2023: $16,500
2024: $40,000
While the drops can be severe — as evidenced by the plunge from 2021 to 2022 — the long-term direction has been decisively upward over the past decade.
“That’s why you don’t really want to make impulsive decisions on the volatility of the day or the week,” says Bergquist. “That’s why it’s seen more as a long-term store of value, and having that long-term perspective is important.”
This view of bitcoin as more than a short-term trading vehicle is gaining traction among some institutional investors.
“[Exchange traded funds], BlackRock and sovereign wealth funds are now holding bitcoin as a store of value. That’s a huge trend,” says Bergquist.
What Drives Bitcoin Prices?
But what drives bitcoin’s price appreciation over time, despite its volatility? Bergquist argues that, in large part, it comes down to a fixed supply in an inflationary world.
“The U.S. government can print more dollars, and that increases the supply and decreases the value of the dollars already in circulation, but this process often increases the price of finite assets like bitcoin,” he says. “There will never be more than 21 million bitcoin ever. It has a capped supply, and no one can change that.”
This hard cap on bitcoin’s total supply is baked into its code. Every four years, the rate at which new bitcoins are created is cut in half in an event known as “halving.” This systematic reduction in new supply, combined with growing demand, has historically led to price increases in the years following each halving.
Bergquist contrasts this with the inflationary nature of fiat currencies.
“What’s the hidden cost of living in dollars? Inflation. Your bank account balance in dollars is worth less over time than if you were to live in bitcoin.”
He acknowledges that bitcoin hasn’t yet reached the goal of a widespread peer-to-peer electronic cash system. However, he sees potential in layer-2 solutions — which involve building digital infrastructure on an existing blockchain that allows for off-chain cryptocurrency exchanges — to enable faster, cheaper transactions that could make bitcoin more viable for everyday payments. An example of a layer-2 solution is the Lightning Network that allows for instant blockchain payments.
“There have been a lot of protocols and layer-2s on different chains that have solved the network congestion issues that might exist, or the technical limitations of the layer-1 blockchain, by pushing it to a side chain, which leads to faster and cheaper payments,” Bergquist explains.
Bergquist sees the broader crypto ecosystem as enabling a multicurrency future where people have more choice in the money they use.
“People can now live a multicurrency life. People can now choose the money that they want to use,” he says. “That’s a huge concept. That’s a huge new idea.”
For now, though, much work remains to be done in educating the public about cryptocurrencies and making them more accessible and user-friendly. Bergquist sees this as a key mission for Coinme.
“I think right now, where we’re at in this day and era, it is really an education problem,” he says. “The more we can educate people on how crypto can solve problems that exist with our current monetary system and financial service providers, the better.”