Since its inception in 2009, Bitcoin has proven its resilience, surviving early skepticism and market volatility. By 2016, people began to think of it less as “nerd money” and more as a currency to be used, and its price began to reflect this sentiment. So, what was the price of Bitcoin in 2016? Bitcoin started the year at $430.72 on 1 January and closed at $963.74 on 31 December, achieving a remarkable 123.8% increase. The first half of the year saw low volatility and steady prices; however, in late May, the price began to rise, reaching $700 in mid-June. It then dropped back to the $600 range, staying there until November, and then Bitcoin surged past $700, $800, and $900, and by the end of the year, it got closer to $1,000, a milestone it finally surpassed in early 2017. In the table below, you'll find detailed data on Bitcoin's daily prices throughout 2016. We've included the opening and closing prices, the day's lowest price, and the trading volume for each day. The table allows you to track Bitcoin's performance over time, explore its price fluctuations throughout the year, and summarize all the data on Bitcoin's price in 2016.
PlasBit historical calculator
The historical calculator is one of several widgets available as a resource on the Plasbit website. It can give you an instant assessment of the value of Bitcoin through time and the outcome of your investment if you have Bitcoin in your portfolio.
Step 1 – Go to the Plasbit Crypto History Calculator page.
To access the Crypto History Calculator, go to the Plasbit home page, scroll down to the footer, look for the 'Resources' heading on the right end of the screen, and select "Site Widgets."
You will access the Widget page, select History Calculator
Step 2 – Select the cryptocurrency you want to check.
Once you have accessed the calculator, select the cryptocurrency you want to check; in this example, BTC (Bitcoin)
Step 3 - Choose the date
Click the month, the year, and the day in the input field to the right.
Step. 4 - Choose the time of the day.
Click "OK" to confirm your choice
Step 5 – Type the amount
Type the amount of Bitcoin you want to check in the input box on the left
In the image above, the example shows that the value of 1 Bitcoin on 22 June 2016 was $670.97; if you had bought one BTC on that day, the value of your investment on the day the screenshot was taken would be $101,632.25 if you had not sold it, the profit from your investment would be $99,961.28.
Bitcoin and cryptocurrency market in 2016
In 2016, Bitcoin had a 123.8% rise in value from $430.72 on 1 January to $963.74 on 31 December. It also kept its dominant position in the cryptocurrency market despite an increased number of competitors. To understand what was the price of bitcoin in 2016, we have to discuss the crypto market in 2016 and what factors could have had a material influence on the market sentiment towards cryptocurrencies in general and specifically on Bitcoin.
Rising Bitcoin Hash Rate
The hash rate measures the total computing power used to process and validate Bitcoin transactions on the network. A higher hash rate means more miners (or stronger mining equipment) are participating. In January 2016, Bitcoin’s hash rate exceeded one exahash per second for the first time, meaning that the Bitcoin network collectively performed over 1 quintillion (i.e., one million of trillions) cryptographic calculations per second to solve the next block. The Bitcoin network became more secure because attacking the network would require enormous computational resources (and cost), making it impractical and expensive to attempt. It also becomes harder for any single entity to control over 50% of the network's mining power (51% attack). Surpassing 1 exahash per second reflected increasing interest in Bitcoin mining, likely due to growing awareness of Bitcoin's value and technological advancements in mining hardware.
Bitcoin Halving
Overall, the 2016 Bitcoin halving was a pivotal moment that showcased the resilience of the Bitcoin network, the adaptability of miners, and the growing recognition of Bitcoin's value in the broader financial landscape. On July 9, 2016, halving took place at block 420,000, reducing the block reward from 25 BTC to 12.5 BTC per block. In the lead-up to the halving, there was considerable speculation and anticipation, leading to increased volatility. The price of Bitcoin rose slightly before the event, with Bitcoin trading at about $583.11 a month before and around $650 at the time of the halving. However, there was a short-term correction immediately after the halving, followed by a significant surge. The 2016 halving contributed to a broader bullish trend in Bitcoin's price. The narrative of Bitcoin as a scarce and deflationary asset gained traction, attracting both institutional and retail investors. This period also saw the emergence of an 'ICO bubble' and increased acceptance of Bitcoin, which further drove up demand and prices. The reduction in block rewards presented a challenge for miners, particularly less efficient operations. However, the overall hash rate of the network continued to rise as more efficient miners adapted and consolidated their operations. This consolidation emphasized the survival of the fittest in the mining ecosystem. The halving reaffirmed Bitcoin's deflationary nature, boosting investor interest and reinforcing its value proposition as digital scarcity drove market demand.
What happened in 2016?
Several significant events influenced the crypto market in 2016, pushing investors towards alternative assets like cryptocurrencies:
· Chinese Stock Market Crash – The sharp sell-off in the Chinese stock market in early January 2016 created volatility in financial markets worldwide. The direct impact on crypto might not have been immediate, but the global economic uncertainty could have influenced investor sentiment and risk appetite, driving some investors to alternative assets.
· OPEC Oil Cut – In November 2016, OPEC agreed to cut oil extraction. Even though the direct correlation between oil prices and the crypto market is not strong, the overall economic confidence is affected by the stability and fluctuations in oil prices, pushing investors to explore alternative markets.
· Global Monetary Policy – Low interest rates and quantitative easing influenced the investors' appetite for higher-yielding assets.
· Brexit referendum – In 2016, the Brexit referendum in the UK created financial uncertainty, leading to sharp declines in traditional financial markets. The pound plummeted against the US dollar, and global equities experienced a substantial drop.
· The US election – Following Donald Trump's victory in 2016, Bitcoin's price surged, driven by optimism about deregulation and economic reform under the Trump administration, amongst other things.
· Institutional Adoption and Regulatory Developments – In 2016, institutional investors became interested in cryptocurrencies and introduced the first regulatory frameworks (e.g., BitLicence). These developments helped legitimize cryptocurrencies and attract more investors.
· Swiss Railway Allows Bitcoin Purchases – In November 2016, Swiss Federal Railways (SBB) upgraded ticket machines across the country to allow Bitcoin purchases, making it easy for users to buy BTC by scanning a QR code on their phone. This initiative marked a step toward mainstream acceptance, providing convenient access to Bitcoin and signaling growing institutional interest in Bitcoin.
· The Japanese Cabinet officially recognizes Bitcoin - In March 2016, The Japanese Cabinet officially recognized Bitcoin and other virtual currencies as having functions similar to real money, positioning Japan as a progressive leader in Bitcoin regulation. This move helped legitimize Bitcoin within the Japanese economy and fostered a supportive regulatory environment that influenced global cryptocurrency markets.
Market Capitalisation
The market capitalization of Bitcoin at the end of 2016 was approximately $17.23 billion, a significant increase compared to the end of 2015. Halving events contributed to the price increase due to a combination of a reduction in supply and an increase in demand. By the end of 2016, Bitcoin reached the value of $963.74, achieving a remarkable 123.8% increase, although it did not reach the peak reached in 2014before the substantial plunge in the same year.
Market Sentiment
The year 2016 was marked by increasing mainstream awareness and acceptance of Bitcoin. This growing interest and the subsequent price increase would have reinforced positive market sentiment. The lack of significant adverse events or regulatory crackdowns during this period also contributed to the optimistic outlook. Several key factors influenced Bitcoin's market sentiment:
· Online Interest and Social Media - The level of online interest, mainly measured by Google search queries and social media activity, positively impacted Bitcoin prices. Studies have shown that increased online interest and positive social media platform sentiment strongly correlate with higher Bitcoin prices.
· Market and Economic Factors - Bitcoin's price in 2016 was also influenced by its relationship with other financial markets. The S&P 500 index positively affected Bitcoin prices, indicating that Bitcoin was procyclical and followed the trends of broader financial markets during this period.
· Speculation and Sentiment - Speculation and investor sentiment were crucial drivers. Fear and greed among investors and the belief in Bitcoin's utility as a store of value and a hedge against inflation contributed to its price movements. The expectation of future price increases also played a significant role in determining demand and, consequently, prices.
· Lack of Major Negative Events - The absence of significant negative events, such as major hacks or stringent regulatory crackdowns, helped maintain a positive market sentiment throughout the year. This stability and growing mainstream awareness and acceptance supported the upward trend in Bitcoin's price.
Major investors in Bitcoin in 2016
In 2016, several prominent venture capital firms and investors were actively involved in funding Bitcoin and blockchain-related startups. These firms played a crucial role in funding and supporting the growth of Bitcoin and blockchain technology in 2016. The most notable were:
· Blockchain Capital - Invested in various blockchain companies, including BitGo, Coinbase, and Kraken. Blockchain Capital was one of the early VC firms focused on blockchain technology.
· Digital Currency Group (DCG) - Founded by Barry Silbert, DCG invested in over 75 companies in the Bitcoin space.
· AXA Strategic Ventures - Invested in Blockstream's $55 million Series A funding round, along with other investors like Digital Garage, Horizons Ventures, AME Cloud Ventures, Blockchain Capital, and FuturePerfect Ventures.
· Digital Garage - Also invested in Blockstream's $55 million Series A round, highlighting their interest in core Bitcoin infrastructure.
· Horizons Ventures - Participated in Blockstream's Series A funding, demonstrating their commitment to blockchain technology.
· AME Cloud Ventures - Invested in Blockstream's Series A round, contributing to the significant funding received by the company.
· Breyer Capital and General Catalyst Partners - Both firms were part of the $60 million fourth round of funding for Circle, a primary Bitcoin wallet and peer-to-peer payment service.
· IDG Capital Partners - Invested in Circle's $60 million funding round and other notable investors like Baidu, Sam Palmisano, and Glenn Hutchins.
· Venture Labo Investment and SBI Investment - Invested $27 million in bitFlyer's Series C round, a Japanese Bitcoin exchange.
· Overstock.com - Provided $16 million in Series A funding to Bitt, a Caribbean-based Bitcoin exchange.
· Bitmain, Cumberland Mining, and FundersClub - Invested in Simplex's $7 million Series A round, supporting the Israeli wallet and payments solution.
· Andreessen Horowitz (a16z) - Although not exclusively focused on Bitcoin in 2016, a16z invested in the broader blockchain space, including companies like Coinbase. However, their significant crypto-focused investments became more prominent in later years.
· Pantera Capital - While primarily known for its investments starting in 2013, Pantera Capital continued to be active in the blockchain space in 2016.
Competition from other cryptocurrencies
In 2016, the cryptocurrency landscape was still in its early stages, but there were already some notable competitors and precursors to the broader altcoin market that would emerge later. Bitcoin was the clear leader, accounting for nearly 90% of the total market capitalization. Ethereum and Ripple were the most notable competitors, with other altcoins starting to emerge and laying the groundwork for the diverse cryptocurrency market that would follow.
Ethereum
Ethereum, founded by Vitalik Buterin, was launched in July 2015 but gained traction in 2016. It was one of the first major competitors to Bitcoin, offering a platform for decentralized applications (dApps) and smart contracts. Ethereum was the top-performing cryptocurrency in 2016, with a remarkable growth rate. At the beginning of 2016, it was trading around $0.96. By the end of January, its price had already doubled; by the summer, it had risen to nearly $20. Despite the DAO Hack, Ethereum's price stabilized around $11.50 by the end of the year, a staggering 1195% increase in value throughout 2016. In June 2016, the DAO (Decentralized Autonomous Organisation), a smart contract built on the Ethereum blockchain, was hacked, resulting in the theft of approximately $55M worth of Ether. This incident led to a hard fork in the Ethereum blockchain, creating Ethereum Classic, and had a temporary negative impact on Bitcoin's price as well.
Ripple (XRP)
Ripple, founded in 2012, was focused on solving the issues related to international transactions. By 2016, it had already partnered with central banks and financial institutions to provide a fast and cheap cross-border transaction solution. In the fourth quarter of 2016, XRP saw a substantial quarter-over-quarter average daily volume growth of 121%, indicating a positive sign of overall market health. This growth was partly attributed to the initial roll-out of Ripple's market-making incentives, which were introduced in February 2016. During the fourth quarter, market participants purchased $4.6 million of XRP directly from Ripple's registered and licensed money service businesses. These sales included restrictions to mitigate the risk of market instability due to large subsequent sales. Institutional investment was highlighted as a key differentiator for XRP, indicating its broader capital market potential. In June 2016, Ripple obtained a virtual currency license from the New York State Department of Financial Services, making it the fourth company to receive a BitLicense.
Market Dynamics
The total market capitalization of the top 100 cryptocurrencies was significantly lower in 2016 compared to later years, standing at about $5.2 billion by the end of 2016. This period marked the beginning of a rapid expansion in the cryptocurrency market, with Bitcoin's share gradually decreasing as other cryptocurrencies gained traction.
The Bitfinex Hack – A significant setback
The Bitfinex hack highlighted significant security lapses in the cryptocurrency exchange's systems and the complexities of recovering and prosecuting such large-scale cybercrimes. It also underscored the need for improved custodial solutions within the Bitcoin ecosystem.
The Hack
In August 2016, hackers infiltrated the Bitfinex cryptocurrency exchange based in Hong Kong. During the breach, approximately 119,756 Bitcoin were stolen, valued at around $72 million at the time of the hack. This amount represented about 0.8% of all Bitcoin in circulation. The hackers exploited a critical security flaw in Bitfinex's system. Bitfinex used a multi-signature security system provided by BitGo, where Bitfinex held two of the three necessary keys on the same device, and BitGo held the third key. This setup allowed the hackers to fully access Bitfinex's internal systems by compromising just one device. The hackers raised the daily transaction limit and executed 2,075 transactions to transfer the Bitcoin to a single wallet.
Immediate Aftermath and Bitfinex Response
The hack led to a significant drop in the value of Bitcoin, with prices plunging by about 20% to around $480 per Bitcoin. Bitfinex halted all Bitcoin withdrawals and trading immediately after discovering the breach. To mitigate the losses, Bitfinex distributed the financial burden across all its clients, reducing each account balance by 36%. Affected customers were issued BFX tokens equivalent to their losses, which could be redeemed for full value or traded for shares in iFinex, the parent company of Bitfinex. Within eight months, all BFX tokens were redeemed or traded, and customers who traded for shares also received Recovery Right Tokens (RRTs) for any future recovered funds. Despite the severity of the hack, Bitfinex continued to operate and worked with international authorities to recover the stolen funds. By 2018, the US government had recovered 27.66 BTC, a small fraction of the total stolen, which was converted to USD and distributed to RRT holders.
Identification and Prosecution of Hackers
In 2019, it was revealed that two Israeli brothers were partially responsible for the hack, though the main perpetrators were not identified until later. In February 2022, Ilya Lichtenstein and his wife, Heather Morgan (also known as Razzlekhan), were charged by the US Justice Department with conspiracy to launder the stolen Bitcoin. Lichtenstein admitted to the theft in August 2023, and both he and Morgan pleaded guilty to money laundering. Lichtenstein was sentenced to five years in prison for his role in the laundering scheme.
Recovery of Stolen Funds
In February 2022, the US government recovered and seized a significant portion of the stolen bitcoin, valued at approximately $3.6 billion at the time, by decrypting a file containing addresses and private keys associated with the stolen funds. This seizure marked the largest financial confiscation in the history of the Department of Justice.
Bitcoin in 2016: the 2014 setback forgotten.
Irrespective of what was the price of Bitcoin in 2016, the year showed continuous growth, the trend continued in 2017 when it recovered the value it had at its peak in 2014 and continued growing, as you can see from the image below.
There will be an occasional fall in value, but there would not be a plunge similar to the one at the end of 2014 In 2016, Bitcoin maintained its overall dominant position in the crypto market, but the year saw the consolidation of competitors. Bitcoin will still be among the top 10 cryptocurrencies in market capitalization, but it will never represent 90% of the market as it did during that year. The decision of the Swiss Federal Railway company to accept payment in Bitcoin represented an important precedent for other major companies to experiment with accepting payment in Bitcoin, bringing the cryptocurrency closer to the goal of its creators to create a digital alternative to cash. The Japanese government's recognition of Bitcoin and other cryptocurrencies as having the function of real money again led to more ways to use it in everyday transactions. However, to this day, the best way to use crypto in everyday transactions remains a crypto card, a card like any other that is loaded from the content of your crypto wallet.
