Investment cycle history

Before Bitcoin there was Gold, which between the year 2000 and the year 2011 went from $250 an ounce to $1,800. This meteoric rise of 620% in 11 years is about 56% per year. This rise in the price of an ounce of gold was partly caused by the financial crisis of 2007 as can be seen in the graph below. This gold chart is available on the TradingView website [1].

It was at this very moment, shortly after the 2007 financial crisis, that an unknown inventor using the pseudonym Satoshi Nakamoto published the white paper [2] of a new digital currency called Bitcoin (BTC), which became famous with its ₿ symbol borrowing the two vertical bars of the dollar sign. For the first time, the principle of the blockchain was used to store value and exchange it with other people. The first generation blockchain was born. It is based on proof of work (POW), which makes it polluting because it consumes a lot of energy to verify transactions. Between 2009 and 2011, Bitcoin began to be known among the geekiest computer scientists. At that time you needed some computer skills to get started: nothing was designed for the general public. Between 2011 and the end of 2017, Bitcoin rose from $1 per unit to $19,000 per unit. This more than exceptional rise made early adopters very rich: it represents an increase of 1,900,000% in 7 years, or about 271,000% per year.

By investing $100 in 2011, you could have obtained $1,900,000 at the end of 2017. Of course, it is very difficult to buy at the bottom and sell at the top, but it gives you an idea of the earning potential of a savvy investor!

This Bitcoin chart is available on the TradingView website (BTC/USD) [3].

It was in 2014 that computer scientists working on Bitcoin came up with the idea of creating a new digital currency: Ethereum (ETH), more powerful and more ambitious than Bitcoin. Ethereum is the second generation blockchain. It was created by Vitalik Buterin, Anthony Di Iorio and Charles Hoskinson, to name only the best known, and the community quickly grew to more than 300 people working on the project. Like Bitcoin, it was originally based on proof of work (POW), before switching to proof of stake (POS) in September 2022. Between 2015 and early 2018, Ethereum rose from $1 per unit to $1,389, an increase of 138,900% in 3 years, or about 46,300% per year. At the time, Ethereum was controversial because it was young and faced difficulties such as a far too low number of transactions per second and high transaction fees for some use cases. These two problems were expected to be solved by switching to proof of stake (POS). For more information, read the Tetras Capital investment fund article that explains this in detail: Ether (ETH) Bearish Thesis [4]. This Ethereum chart is available on the TradingView website (ETH/USD) [5].

Now that these three assets have seen significant increases, the biggest part of the rise is certainly behind them: it is much harder to obtain a gain of 1,000% or 10,000% on assets already as highly valued as Gold, Bitcoin or Ethereum. That's why the smartest investors are looking for the next asset to explode upward. What will be the third generation blockchain? What is coming after the blockchain? For that you have to research, try and analyze. And the task is not easy: more and more cryptocurrencies are being created, which does not make it any easier. Of course, a cautious investor can always bet on Gold and Bitcoin, which are considered safe assets to store value, see SOV (store of value) [6].

• [1] https://www.tradingview.com/symbols/XAUUSD/
• [2] https://bitcoincore.org/bitcoin.pdf
• [3] https://www.tradingview.com/symbols/BTCUSD/
• [4] https://medium.com/@tetrascapital/ether-eth-bearish-thesis-the-flippening-of-market-irrationality-8633e70ab498
• [5] https://www.tradingview.com/symbols/ETHUSD/
• [6] https://en.wikipedia.org/wiki/Store_of_value