Bitcoin Hype Cycles: The 4 Waves of Bitcoin Adoption
This article discusses the evolution of Bitcoin adoption, from its early days as a niche currency to its mainstream status today.
This article tracks the key milestones and challenges of Bitcoin adoption, from the first-ever halving to the introduction of Bitcoin ATM machines and the emergence of institutional players. Despite ongoing debates about its ROI and price, the future of Bitcoin holds promise for gains, legitimacy, and risk.
The First Wave: Satoshi’s Disciples
From 2011–2013, a small group of believers, enthusiasts, developers, and investors known as Satoshi’s Disciples were the first wave of Bitcoin adopters. The cycle began on February 9th, 2011, when news broke that BTC had reached $1, achieving parity with the US dollar for the first time.
On November 16, 2012, WordPress became the first major company to accept Bitcoin for payment. Later that month, Bitcoin underwent its first-ever halving, which dropped the block reward for miners from 50 BTC to 25 BTC.
Bitcoin’s record-breaking run pushed the cryptocurrency’s market capitalization over $1 billion for the first time ever. It also attracted a lot of attention. In February of 2013, Coinbase reported selling more than $1 million worth of Bitcoin at an average price of $22.
The first Bitcoin ATM was installed in Vancouver, British Columbia-based Waves Coffee Shop in October 2013. On its first day, that ATM saw 81 transactions, a third of those by first-timers, and $10,000 exchanged from one currency to another.
The Bitcoin market reached another historic milestone when one Bitcoin first exceeded the price of one ounce of gold, breaking past the triple digits to a high of $1165 on Nov 29, 2013. Therefore, at the top of the first hype cycle, Satoshi’s Disciples had an opportunity to cash out a 116,400.00% ROI!
The Second Wave: Crypto Crusaders
From 2015–2017, the Crypto Crusaders, a diverse group of tech enthusiasts, traders, and institutional investors, joined the Bitcoin community. The most fortunate of the Crypto Crusaders entered their investments after a year-long bear market, on January 14th, 2015, when the price of Bitcoin hit rock bottom at $171.51 USD/BTC. The following hours marked the last time you could ever buy 1 BTC for under $200.
Despite the ongoing negative sentiment throughout 2014, Coinbase grew from 600,000 users to 2.1 million users. On January 20, 2015, Coinbase managed to raise $75 million in its Series C funding round, raising its total VC funding to over $105 million since its 2012 formation. Fortune attributed most of Coinbase’s fundraising success to investments from established financial groups like NYSE and BBVA.
In June 2015, the New York State Department of Financial Services began its investigation into Bitcoin and cryptocurrencies. This investigation would eventually lead to the creation of the BitLicense. Later that year, in November, the Unicode Committee adopted the current Bitcoin currency symbol (₿), giving the internet’s first widespread native currency its own character.
2016 saw the Bitcoin network’s hash rate top 1 exahash/second. The hash rate reflects the amount of computing power committed to Bitcoin and is an important measure of the strength of the network.
Bitcoin once again broke the $1,000 resistance on January 1st for the first time in over three years. Throughout 2017, month after month, Bitcoin continued to break its all-time high records until peaking in November. At that time, the earliest Crypto Crusaders had an opportunity to cash out at $20,089, banking the highest potential ROI for the second wave of up to 11,613%.
Third Wave: Institutional Titans
From 2018–2021, the Institutional Titans, represented by hedge funds, banks, and corporations, entered the Bitcoin market in large numbers. On December 15, 2018, this wave of adopters began buying as low as $3,191 per BTC/USD.
At the top of the fourth hype cycle, on April 14, 2021, these early adopters had the opportunity to cash out at $64,863, banking a potential ROI of up to 1,933%. This wave of adoption brought mainstream attention to Bitcoin and legitimized its place as an investable asset.
Institutional investors brought a level of stability to the market, contributing to its maturation and growth. The interest from these big players has not only driven up the price of Bitcoin but also opened the door for other cryptocurrencies and decentralized finance projects.
The Fourth Wave: Global Masses
Starting in November 2022 and continuing to the present day, the fourth wave of Bitcoin adoption is characterized by an even larger number of mainstream retail investors, celebrities, low-income participants, emerging market players, and even some governed nations entering the Bitcoin ecosystem.
Many early adopters of the fourth wave got in as low as $15,599.05 per BTC/USD, and as of February 26, 2023, the current market price of Bitcoin is $23,439.75. This means they have already realized a potential ROI of up to 50.26%.
The Future of Bitcoin
The future of Bitcoin remains bright, with many experts predicting that the price of Bitcoin will continue to rise in the coming years. As such, it’s not unrealistic to imagine that these early adopters could see even more significant gains if they continue to hold onto their Bitcoin. If the price were to continue to rise, these early adopters could cash out in the future, potentially banking a much higher ROI.
Conclusion
The First Wave of Satoshi’s Disciples brought Bitcoin to early adopters who weathered the turbulent cycle of BTC volatility, striving for parity with the U.S. dollar. As WordPress and other companies began to accept Bitcoin, the halving of the block reward forced miners to innovate, leading to a surge in market capitalization and the emergence of platforms such as Coinbase and Bitcoin ATM machines in cities like Vancouver, British Columbia. The pioneering Waves Coffee Shop was one of the first businesses to accept cryptocurrency as payment, as enthusiasts and Crypto Crusaders rallied around Bitcoin as the new gold.
The Second Wave saw the arrival of tech enthusiasts, traders, and institutional investors who rode the highs and lows of the bear market, driving increased VC funding and the introduction of Bitcoin futures on major exchanges such as the NYSE. Big players such as BBVA invested heavily in Bitcoin, while the hash rate soared, and the Unicode Consortium even introduced a Bitcoin currency symbol. Bitcoin was increasingly seen as a native currency and broke all-time high records, sparking the emergence of Third Wave of Institutional Titans.
Today, Bitcoin has captured mainstream attention and is viewed as an investable asset with stability and maturity. With sustained growth and global adoption, it has become a popular choice for the global masses — from retail investors to celebrities, low-income participants to emerging market players, and even governed nations. While ROI and price remain topics of debate among experts, the future of Bitcoin continues to hold promise for gains, legitimacy, and risk.
