3 Lessons from BTC History: What new investors can learn & what’s next

Bitcoin has been a rollercoaster ride of innovation, speculation, and volatility since its inception in 2009. For investors new to the crypto world, BTC history isn’t just a tale of dramatic price movements: it could be something of a roadmap as the future of the digital asset unfolds. Invity outlines the key takeaways from Bitcoin’s journey thus far and the upcoming trends they may signal.

Lesson 1: Adoption drives value

Bitcoin began as a niche experiment among cryptographers and computer scientists. But within two years after launch, bitcoins were being traded between individuals for real-life goods like pizzas as well as less wholesome substances. With this proof of multiple use cases—as a means of exchange as well as a store of value—the price of bitcoin began to rise.

Mainstream payment services took note and also began to accept bitcoin as a payment method, driving its value still higher and uncovering still more use cases. Fast forward to today, and bitcoin is recognized as legal tender in some countries, major corporations hold it on their balance sheets, and an uncertain number—certainly in the tens of millions—of people invest in it on an individual basis. Not coincidentally, this has led to the all-time highs we're experiencing at the time of this writing.

Future trend: Increased institutional participation

It may be that Bitcoin has matured to the point where its adoption and value become a cyclical self-fulfilling prophecy: it has become too valuable and widespread to ignore, and so increased adoption is just good sense in all areas of the economy, further driving its value, and so on.

This seems to be confirmed by financial giants around the globe offering Bitcoin ETFs and investing icons speaking favorably about Bitcoin. Perhaps more significantly, Donald Trump—again President of the US, which sets the tone for many financial decisions worldwide—has already taken crypto-friendly steps, including ordering the creation of a US strategic Bitcoin reserve and banning CBDCs based on the US dollar (we will cover CBDCs later).

The future, at least in the medium term, seems unquestionably headed toward more mainstream BTC adoption, more integration into legacy systems, and more gains in value.

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Lesson 2: The digital ecosystem will increase in complexity

Bitcoin has been a work in progress since its beginnings. As Bitcoin faces criticism over slow transaction speeds and high fees, solutions like the Lightning Network aim to make it faster and more cost-effective. These innovations could enhance Bitcoin’s utility as a medium of exchange, making transactions more common between more users in ever more distant corners of the world.

But Bitcoin also ushered in the era of crypto-based projects an entire digital ecosystem of decentralized finance (DeFi). This has unlocked new use cases like lending, staking, and NFTs, further solidifying crypto as a major economic force. At the same time, however, this has opened the door for bad actors preying on well-intentioned investors. "Rug pulls" are some of the most notorious examples of scammers in the crypto space.

Future trend: Regulation is inevitable

In most places, requirements like know your customer (KYC) are standard practice. But beyond that, crypto regulations depend on who you are and where you are.

As longtime believers in Bitcoin's mission have pointed out, some regulations—like China’s crypto ban—are often repressive attempts at keeping control of money in state hands. At the same time, lighter touches—like the US Securities and Exchange Commission clarifying under what circumstances crypto is considered a security—helps protect consumers and prevent bad behavior at crypto companies.

Unfortunately for this trend, any exact shifts in regulations to be expected are simply too varied to predict. However, the increased institutional adoption and complaints before various courts seem to signal that investors should remain informed and aware of possible changes going on in their jurisdiction.

One way to stay on the right side of current and future regulations is to buy your crypto through reputable sources like Invity. Among other things, this will help you keep track of which investments you make and when, an invaluable resource when it comes to filing your yearly taxes.

Lesson 3: Volatility is the price of admission

As every risk warning statement says, past performance is no guarantee of future results (and a worthwhile reminder: Invity doesn't offer investing advice). There's no denying that this is worth keeping in mind as newcomers to crypto take a look at Bitcoin's history of massive price swings. In 2017, its price skyrocketed from under $1,000 to nearly $20,000, only to crash to $3,000 by late 2018; similarly, 2021 saw Bitcoin’s price surge to $69,000 before facing another steep correction. This type of volatility is a hallmark of Bitcoin and cryptocurrencies at large.

Trend: Focused on the long term

For new investors, the key is not to panic during market downturns. Instead, focus on your long-term strategy and ensure you’re investing amounts you can afford to lose. This is especially easy if you set up automated recurring buys (DCA) in the Invity app. While, again, future results aren't precisely predictable, Bitcoin has shown an overall upward trend over its lifetime and has always recovered from its lows.

Bonus trend: Watch halving cycles

For extra help keeping an optimistic long-term outlook, one possible trend as the years go on is the halving cycle. Halvings, which happen every four years, tend to coincide with 18 to 24 months of healthily increasing Bitcoin prices (as well as media attention). These are often separated by a few years of stagnant or dropping value, which is more than corrected during the next halving.

Halvings have only happened four times over Bitcoin's lifetime, so it's hard to tell how true this cycle will remain as the asset matures. But so far, so good.

For new investors, the lessons of adoption, volatility, regulation, and security provide a roadmap for navigating the future of the crypto space. And whatever the future holds, Invity will be right there with you—start with the safe and secure option today or check in on your investment!