Bitcoin Price Surge in December 2017: A Historic Cryptocurrency Bull Run
1. The Beginning of the Surge
The rise of Bitcoin's price in December 2017 was not an isolated event. It had been climbing throughout the year, but by November 2017, the cryptocurrency’s market momentum accelerated significantly. At the start of December 2017, Bitcoin was valued around $10,000, a figure that was already causing a stir among investors. But this was just the beginning.
Bitcoin's price increased exponentially throughout the month. By mid-December, Bitcoin's price crossed $17,000, and by December 17, 2017, it hit its all-time high of $19,783.06 on some exchanges. This growth was fueled by a mix of factors, including increased media attention, the launch of Bitcoin futures trading, and the expansion of retail investor participation.
The following table highlights the weekly price changes during December 2017:
| Date | BTC Price | % Increase (from start of Dec) |
|---|---|---|
| December 1, 2017 | $10,000 | - |
| December 7, 2017 | $16,500 | +65% |
| December 17, 2017 | $19,783.06 | +98% |
| December 22, 2017 | $13,800 | -30% from peak |
| December 31, 2017 | $14,156 | +41% |
As can be seen, the price of Bitcoin surged significantly before correcting sharply towards the end of the month.
2. Driving Factors Behind the Surge
Several key factors drove the December 2017 Bitcoin price surge:
a. Media Hype and Retail Investors
The increased media attention surrounding Bitcoin created a sense of urgency among investors, especially retail investors who feared missing out on the explosive gains. Bitcoin became a topic of discussion not only in financial circles but also in mainstream media, leading to a flood of new participants in the market.
b. Institutional Involvement
The introduction of Bitcoin futures on major exchanges, such as the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE) in December 2017, was seen as a significant milestone in the cryptocurrency's adoption. This development allowed institutional investors to participate in the market, adding liquidity and legitimizing Bitcoin in the eyes of the broader financial community.
c. Limited Supply and High Demand
Bitcoin's supply is capped at 21 million coins, and the combination of high demand with limited availability played a significant role in driving up the price. Investors viewed Bitcoin as a scarce asset, akin to digital gold, which contributed to its allure during the December bull run.
d. The Psychological Effect of Crossing $10,000
Psychologically, crossing the $10,000 mark had a profound impact on investor sentiment. Round numbers often serve as psychological barriers, and the breach of this milestone reinforced the belief that Bitcoin's value could continue to rise, driving even more investment.
3. The Aftermath and Correction
By the end of December 2017, Bitcoin's price began to correct. After reaching nearly $20,000, the market became extremely volatile, and by the end of the month, the price had dropped to approximately $14,000. The correction was steep and continued into 2018, with Bitcoin losing around 65% of its value by mid-2018.
The following chart shows the sharp rise and subsequent decline of Bitcoin's price in late December 2017:
| Date | Price ($) | % Change from Peak |
|---|---|---|
| December 17, 2017 | $19,783.06 | Peak |
| December 22, 2017 | $13,800 | -30% |
| December 31, 2017 | $14,156 | -28% |
| January 7, 2018 | $17,400 | -12% |
| January 16, 2018 | $10,000 | -49% |
a. Speculation and Market Saturation
Much of the price rise in 2017 was driven by speculative buying. As prices soared, many early investors decided to cash out, creating downward pressure on the price. Additionally, the influx of retail investors with limited understanding of the market dynamics led to panic selling when the correction began.
b. Government Scrutiny
Governments and regulatory bodies around the world began paying closer attention to Bitcoin as its price skyrocketed. Countries like China and South Korea introduced measures to curb cryptocurrency speculation, which contributed to the market's cooling off.
4. Impact on the Cryptocurrency Ecosystem
The December 2017 Bitcoin surge had far-reaching implications for the broader cryptocurrency market and financial ecosystem.
a. Growth of Altcoins
Bitcoin's bull run in 2017 also had a ripple effect on the prices of other cryptocurrencies, known as altcoins. Cryptocurrencies like Ethereum (ETH), Ripple (XRP), and Litecoin (LTC) saw significant price increases during this time. Many investors who found Bitcoin too expensive began diversifying into altcoins, hoping to replicate Bitcoin's success.
| Altcoin | Price on Dec 1, 2017 | Price on Dec 31, 2017 | % Increase |
|---|---|---|---|
| Ethereum | $460 | $720 | +56% |
| Ripple | $0.25 | $2.30 | +820% |
| Litecoin | $85 | $250 | +194% |
b. Institutional Interest in Cryptocurrencies
The December 2017 surge increased institutional interest in cryptocurrencies. While many large financial institutions were initially skeptical of Bitcoin, the massive price increase forced them to take notice. Some financial firms began offering cryptocurrency-related services, such as custody solutions and trading desks, to meet growing client demand.
c. Development of Blockchain Technology
The rise of Bitcoin in 2017 also brought increased attention to blockchain technology, the underlying system that powers Bitcoin and other cryptocurrencies. Many companies began exploring how blockchain could be used in industries like supply chain management, healthcare, and finance to improve efficiency and transparency.
5. Lessons Learned
a. Volatility
The December 2017 surge and subsequent crash highlighted the extreme volatility of the cryptocurrency market. Investors who entered the market without fully understanding the risks faced significant losses during the correction.
b. Importance of Regulatory Framework
The events of December 2017 also underscored the need for clearer regulatory frameworks around cryptocurrencies. Governments and financial regulators have since worked to establish guidelines to protect investors and prevent illicit activities in the crypto space.
c. Long-term Viability of Bitcoin
Despite the correction, Bitcoin has continued to remain a significant player in the global financial system. The 2017 surge demonstrated Bitcoin's potential as an alternative asset class, and it has since gained acceptance as a store of value, similar to gold.
6. Conclusion
The Bitcoin price surge in December 2017 was a landmark event in the history of cryptocurrencies. It captured the imagination of the public and brought Bitcoin to the forefront of global finance. While the subsequent correction was severe, the events of December 2017 laid the foundation for the continued growth and development of the cryptocurrency market. Today, Bitcoin remains a key player in the digital asset ecosystem, and the lessons learned from 2017 continue to shape the industry.
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