When is the right time for Bitcoin investors to buy?

Summary Overview

The "When Current Bitcoin Holders First Bought In" chart compiled by HCCVenture provides a clear view of Bitcoin investment behavior over the years. The peak was recorded in 2020, with 22% of current investors buying Bitcoin for the first time, reflecting the appeal of this cryptocurrency in the context of global economic uncertainty. In contrast, 2022 and 2023 saw a sharp decline in the number of new investors, with the rate of 8% and 5%, respectively, before recovering slightly to 7% in 2024. This data not only sheds light on investment trends but also reflects market sentiment over each period.

Detailed Analysis

2016 and before and 2017: Pioneering investors

15% of current investors bought Bitcoin in 2016 or earlier, when it was in its infancy and cost just a few hundred dollars. This group of pioneer investors believed in Bitcoin’s long-term potential even though the market had not yet really exploded. By 2017, the percentage of new investors had dropped to 8%, but this was a milestone year when Bitcoin’s price increased sharply, reaching nearly $20,000 in December. This growth created the FOMO (Fear of Missing Out) effect, attracting public attention and laying the foundation for later investment waves.

2018-2019: Patience in Volatility

In 2018, 10% of new investors entered the market, despite the sharp drop in Bitcoin prices from their 2017 peak to below $4,000 by the end of the year. This shows that some investors still see long-term potential and are willing to buy at low prices. In 2019, the rate increased slightly to 11%, coinciding with the recovery period of Bitcoin prices, hovering around $10,000 by mid-year. This recovery encouraged new investors to enter the market, while also reinforcing confidence in Bitcoin’s long-term growth potential.

2020: Peak investment wave

2020 saw a peak of 22% of current investors buying Bitcoin for the first time. Bitcoin’s price surged from $7,200 at the start of the year to over $29,000 by the end of the year, fueled by institutional participation such as MicroStrategy (which invested $425 million in Bitcoin that year) and safe-haven sentiment amid the COVID-19 pandemic. This event not only marked Bitcoin’s entry into the mainstream investment market, but also reflected a shift in investors’ perceptions of the role of cryptocurrencies in their portfolios.

2021-2022: From Peak to Recession

In 2021, 14% of new investors entered the market when Bitcoin hit its all-time high of nearly $69,000 in November, thanks to increased interest from financial institutions and broader public adoption. However, this was a decrease from 2020, suggesting that some investors may have gotten in earlier during last year's bull run. By 2022, the proportion of new investors had plummeted to 8%, as the market entered "crypto winter." Bitcoin's price plummeted below $20,000, affected by factors such as global inflation, rising interest rates, and negative events such as the collapse of Terra-Luna and the FTX exchange.

2023-2024: Slow but steady recovery

In 2023, only 5% of new investors participated, the lowest level in the period surveyed. Bitcoin prices fluctuated between $25,000 and $30,000, reflecting investor caution as the market was still recovering from previous shocks. However, by 2024, the rate increased slightly to 7%, possibly due to Bitcoin prices recovering to around $40,000 (based on hypothetical data), along with more optimism as the cryptocurrency market gradually stabilized. However, this figure still does not reflect the excitement of the 2020-2021 period.

Market Assessment

The 2020 investment wave shows that Bitcoin has become a mainstream investment asset, especially during times of economic uncertainty. However, the sharp decline in 2022-2023 reflects the impact of the market downturn and systemic risks in the crypto industry, making new investors more cautious. The group of investors from 2016 and before, accounting for 15%, shows long-term confidence in Bitcoin as a "hold" asset despite the volatility. The slight recovery in 2024 shows growth potential, but it will still take time for the market to regain its previous strong growth momentum.

Bitcoin continues to demonstrate its appeal as an investment asset, especially during periods of strong price growth such as 2020 and 2021. However, the cautious sentiment during recession years shows that investors are increasingly concerned about the stability and sustainability of the cryptocurrency market. To sustain growth, the industry needs to address systemic risks and build long-term confidence. Potential investors should carefully consider macroeconomic factors and price movements before entering the market.