Bitcoin's Wild Ride: From $6,000 to Legal Tender and Back

From $6,000 to Legal Tender in El Salvador

Bitcoin doesn't need belief; it needs the system it promised to dismantle to end up buying it. In September 2018, it traded around $6,000, and its supporters were a handful of people arguing online. By 2021, a sovereign state declared it legal tender and announced it would mine using the energy from its volcanoes. In between, the price went from $6,000 to $51,000, dropped a third in a single candlestick, and returned to $40,000. The technology worked like a Swiss watch. The price moved like a weathervane in a storm. It's important not to confuse the two.

Bitcoin Only: The Doctrine That Withstood All Crashes

The prevailing position was the most uncompromising: only Bitcoin exists, and everything else—Ethereum, EOS, Ripple, the shitcoins—is reduced to scams or flawed copies of a working original. The central argument was an analogy to home video: VHS, Beta, and Video 2000 competed for years, and only one survived. The market rewards not novelty, but endurance. Any external failure—a software bug, a 51% attack on a specific derivative—served as inexhaustible ammunition against rival projects.

The refutation came from the other side with the classic criticisms: the energy consumption, the slowness, the suspicion that a community living by promising perpetual revaluation couldn't be mistaken for real use. For critics, Bitcoin was an obsolete asset sustained by the faith of latecomers who needed to believe.

The arithmetic ultimately vindicated the intransigents, at least relatively. The Ethereum-Bitcoin pair went from 0.018 in January 2017 to 0.15 at its all-time high that year, and in 2021, it was trading around 0.03 again. Translated: the second-largest cryptocurrency by market capitalization was still worth less than half of its peak value against Bitcoin. An uncomfortable fact for anyone who had bet on the rest of the market.

The Year No One Predicted, and the Crash That Trinc

In early 2021, with Bitcoin hovering around $50,000, the conversation shifted. It was no longer about whether the currency had value, but at what price it was convenient to sell. One investor perfectly summarized the mood: it was like the elevator heating up on the way to the bedroom, with the risk of getting stuck halfway before reaching the all-time high. And with the growing suspicion that supply scarcity against demand would push prices even higher.

The correction arrived, and how. In a few days, the price went from $51,000 to $25,000; a single candlestick erasing 55% to 60% of its value in just one week. The most repeated diagnosis was a washout: painful, but not new. In the 2017 cycle, they recalled, the maximum drawdown had been 39%. What once seemed an anomaly was beginning to look like a pattern.

The technical explanation that gained the most traction pointed to new leveraged contracts on XRP, Ether, and EOS. When a leveraged product goes haywire—a bearish byproduct rises 40% when it should have risen 24%—capital jumps from one asset to another, destabilizing the real balance of large intermediaries. In one of these windows, someone sold 13,000 BTC against Tether in less than five minutes to the market. That was enough to trigger stop-losses across half the market.

El Salvador Makes Bitcoin Legal Tender

The announcement came as the market was still reeling. El Salvador passed a law to adopt Bitcoin as legal tender, with a 90-day implementation period, becoming the first state to take such a step. The Central American country, where nearly 20% of GDP comes from remittances from its emigrants, also promised to build the necessary infrastructure with a satellite technology company to connect rural areas to the network.

It was the moment many veterans admitted they never would have imagined such a thing. That states would adopt it was a theoretical hypothesis; that they would do so before an ETF was approved or a major tech company adopted the currency as a payment method was unthinkable. The dominant interpretation: the predicted inflation of the dollar had made some governments nervous.

Skepticism arrived from an unexpected quarter: logistics. In a country with no mobile coverage in much of its territory, setting up a payment network over Lightning with satellites sounds epic and works poorly. The cost of the necessary installation to connect—$500 to $1,000 compared to an average salary of $380—was the favorite argument of the incredulous. Volcanic epicness, they implied, makes for a good headline but a bad deployment plan.

China Bans Mining, and the Network Reorganizes Itself

The other major shock of the period came from Beijing. The Chinese regime announced a ban on mining, holding, and trading cryptocurrencies, with penalties that, according to circulating reports, could reach ten years in prison. For many, it was the blow that had been rumored for years.

What was significant was not the ban itself, but its effect on the network. The dominant argument was that Bitcoin doesn't depend on a specific country mining or not mining: if Chinese miners shut down, the difficulty adjustment automatically rewards those keeping their equipment running elsewhere in the world. In one fell swoop, they argued, the network becomes more decentralized, the hashrate is redistributed, and Chinese control over the system vanishes. The equipment, however, ends up as paperweights or for sale.

BlackRock, Banking, and the Old Suspicion: If They're In, Who Is Bitcoin For?

Meanwhile, on Wall Street, the debate took an unexpected turn. The CEO of BlackRock was quoted as saying, according to circulating reports, that Bitcoin could replace gold and that cryptocurrencies were here to stay. The same financial players controlling capital starting to buy divided supporters into two irreconcilable camps.

For some, it was the ultimate validation: if institutional money enters, the asset ceases to be a curiosity and becomes an investment class. For others, it was the announcement that Bitcoin would eventually be concentrated in a few hands, just like gold, housing, or any other valuable asset. Bitcoin's initial distribution, with nearly 90% of the units already mined, did not prevent this concentration. By buying hand over fist, they recalled, one could acquire already-issued bitcoins, not just new ones.

The Investor's Minute: Holding On, Regretting, and Valuing Life

The most human part of this archive is the regrets. One woman recounted buying her Bitcoin in the spring of 2016 and keeping it in a paper wallet. She held it simply, away from the noise, with no intention of selling and no need for it. At the other extreme was someone who had convinced his own sister to buy four Bitcoins at 250 euros and watched her spend them on furniture and "trifles" a couple of years earlier. The sister was now crying in corners while he hadn't touched a single satoshi.

Another admitted to starting to invest without understanding anything, obsessing over timing the exact moment, and spending weekends with price alerts on, sleeping poorly. His conclusion was an old maxim: don't invest in what you don't understand. A third added the nuance that summarizes it all: who spends a Bitcoin on a consumer item knowing it will appreciate, and the answer being that sometimes we also like to value our own lives.

Proof-of-Work vs. Proof-of-Stake, and the Coming Taproot

The technical debate had its own corner. Against proof-of-stake systems, PoW defenders argued that mining distributes new coins because miners have to sell to pay the electricity bill. In PoS, however, those who own more earn more and have no incentive to distribute anything, which concentrates capital. Their conclusion: security, decentralization, and distribution, three things that PoW supports better.

And then there was Taproot. The upgrade, signaled by over 90% of the hashrate, was presented as the real underlying news amidst the price noise. It would improve transaction privacy and efficiency. For the most seasoned veterans, it was a reminder that price action creates noise, but code makes history.

---

With these differentials, one might say Bitcoin should have become a common currency. It remains, above all, an asset to be held. Cycles repeat with new actors and different prices, and no one yet knows if the next peak will arrive in the fall or if another candlestick erasing half the market is due first. The only honest prediction is that there will be another.