On November 27, 2013, Bitcoin crossed $1,000 per coin for the first time. It was a number that had once seemed impossibly distant. Just two years earlier, Bitcoin had traded for under $1. Just six months earlier, it had been around $100. Now, one bitcoin was worth more than an ounce of gold. The achievement triggered celebrations in the crypto community and sudden panic in the mainstream financial media.
The 2013 rally was driven by several factors. The Cyprus banking crisis earlier that year had introduced Bitcoin to a European audience looking for alternatives. Chinese demand was exploding — the country’s capital controls and surging middle class created massive appetite for Bitcoin as a way to move wealth abroad. Chinese exchange BTC China briefly became the largest Bitcoin exchange in the world. And the U.S. Senate held hearings on virtual currencies in November 2013 at which the tone was surprisingly positive, with one senator calling Bitcoin “a legal means of exchange.”
The rally was also fueled by a new wave of retail investors who had watched their friends get rich and decided they wanted in. Mt. Gox still dominated, processing the bulk of global trade, but exchanges like Bitstamp, Kraken, and BTC-e were growing rapidly. Wallets were getting easier to use. News articles began featuring Bitcoin as a legitimate investment, not just a curiosity.
At the peak, on November 30, 2013, Bitcoin briefly touched $1,242 on Mt. Gox. This represented a 100-fold increase from the start of the year. Early miners who had accumulated thousands of coins saw themselves become millionaires. Stories spread of teenagers who had bought $20 of Bitcoin in 2011 and suddenly had $200,000. The Winklevoss twins, who had lost the Facebook lawsuit to Mark Zuckerberg, emerged as major Bitcoin holders and started a Bitcoin exchange of their own.
But as in 2011, the rally was followed by a brutal crash. Regulatory concerns in China, mounting problems at Mt. Gox, and simple profit-taking sent the price tumbling. By April 2014, Bitcoin would be at $430. By early 2015, $220. The bear market would last two years. Yet the 2013 rally had cemented something important: Bitcoin was no longer a hobby project. It was a global asset, with a price that moved on real-world news, driven by real demand from real people. The world had noticed. There was no going back.
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