Chapter 6. Why the price of bitcoin rises and falls

1. Most people come for the number: “In April 2013 a bitcoin sold for about $100”, “In December 2017 it briefly touched about $20,000, then spent the next” and 3 more · How the price is set, and why it swings: “In 2011, the price fell about 93%, from about $32 to about” · How to think about the swings: “Every 4-year window I checked, from 2015 through May 2026, ended higher”

   Historical bitcoin prices, drawdowns and rolling 4-year returns: Yahoo Finance, BTC-USD monthly price history (CoinMarketCap data), January 2015 to May 2026, finance.yahoo.com, retrieved September 2026 (December 2017 high $20,089; December 2018 low $3,191; November 2021 high $68,790; November 2022 low $15,599; October 6, 2025 high $126,198; May 2026 range $72,436 to $82,792). 2011 peak of $31.91 on June 8, 2011, and the 93% fall that followed: Bitcoin Magazine, “Anniversary of the Great Bubble of 2011,” June 2012. 2013 prices and the January 2015 low: Bitcoin.com, “Bitcoin Price History,” retrieved September 2026. The 4-year claim was checked against every 48-month window in the monthly data from January 2015 through May 2026, buying at the monthly high and selling at the monthly low; none was negative.

2. Most people come for the number: “In January 2024 the first exchange-traded funds holding bitcoin opened in the” · How the price is set, and why it swings: “By 2024 they included pension funds buying through an exchange-traded fund”

   U.S. Securities and Exchange Commission, statement on the approval of spot bitcoin exchange-traded products, January 10, 2024; Grayscale Investments v. SEC, 82 F.4th 1239 (D.C. Cir. August 29, 2023), vacating the SEC’s denial of Grayscale’s application as arbitrary and capricious.

3. Most people come for the number: “By June 2026 it had fallen by more than half, to below…”

   CNBC, “Bitcoin cracks $60,000, sinking to lowest level since October 2024,” June 5, 2026, cnbc.com; the 2026 low of about $58,400 came on June 30, 2026 (KuCoin market data); Galaxy Research, four-year cycle report, June 12, 2026 (a 51% drawdown as of June 9).

4. How the price is set, and why it swings: “and by 2025 at least one national government”

   Executive Order, “Establishment of the Strategic Bitcoin Reserve and United States Digital Asset Stockpile,” The White House, March 6, 2025, whitehouse.gov, retrieved September 2026. The order states that bitcoin deposited into the reserve “shall not be sold.”

5. How the price is set, and why it swings: “In late 2025, Kaiko, a market-data company, counted roughly $400”

   Kaiko Research, bitcoin 1% market depth on Binance, as reported December 20, 2025: above $600 million at the October 2025 high and under $400 million in December 2025 (retrieved October 2026).

6. How the price is set, and why it swings: “Since the April 2024 halving, it has been about 450 a day” · What a hard asset is: “Bitcoin’s stock-to-flow ratio, after the 2024 halving, is around 120, and”

   Issuance schedule and 2024 halving: Bitcoin whitepaper (Nakamoto, 2008) and bitcoin.org developer documentation; block 840,000, April 2024, reward reduced to 3.125 bitcoin, about 450 new bitcoin a day. Stock-to-flow computed from that issuance (about 164,000 new bitcoin a year against about 20 million in circulation, May 2026), giving a ratio of about 120.

7. What a hard asset is: “all the mining in the world adds only about 1.5 to”, “Gold’s stock-to-flow ratio is around 60, meaning it would take about”

   Gold supply growth and stock-to-flow: World Gold Council, “How much gold has been mined?” (above-ground stock of 219,891 tonnes at the end of 2025) and “Gold Demand Trends: Full Year 2025” (mine production of 3,672 tonnes in 2025), gold.org, retrieved September 2026. Mine production is about 1.7% of the stock, a stock-to-flow ratio of about 60.

8. What a hard asset is: “grew by roughly 40% between early 2020 and early 2022”

   M2 money stock, February 2020 to February 2022: Federal Reserve Bank of St. Louis, FRED series M2SL (about $15.4 trillion to about $21.7 trillion, an increase of about 41%), 2026.

9. What a hard asset is: “a popular “stock-to-flow model” that used it to forecast the price” · The price models you will see online: “The table of what each one says, and where each one broke” (now on the chapter page, under More from this chapter)

   Zeke Faux, Number Go Up: Inside Crypto’s Wild Rise and Staggering Fall, Currency, 2023. Price models: PlanB, “Modeling Bitcoin’s Value with Scarcity,” March 22, 2019, medium.com; FXStreet, “Bitcoin stock-to-flow model invalidated as BTC closes 2021 below $100,000,” January 1, 2022, fxstreet.com; Galaxy Research, four-year cycle report, June 12, 2026, galaxy.com (peak of $124,824 on October 6, 2025; drawdown of 51% as of June 9, 2026); Newhedge, “Bitcoin Power Law,” newhedge.io; Timothy Peterson, “Metcalfe’s Law as a Model for Bitcoin’s Value,” Alternative Investment Analyst Review, 2018; all retrieved October 2026.

10. What a hard asset is: “A computer scientist named Nick Szabo gave the deeper reason a name”

    Nick Szabo, “Shelling Out: The Origins of Money,” 2002.

11. What a hard asset is: “Economists call that a perfectly inelastic supply. Saifedean Ammous calls it absolute scarcity” · Savings, or speculation?: “The economist Saifedean Ammous made a longer version of the case”

    Saifedean Ammous, The Bitcoin Standard, Wiley, 2018.

12. What a hard asset is: “Economists since Carl Menger in 1871 have taught that value”

    Carl Menger, Principles of Economics, 1871, chapter 3, on value as a judgment made by people about goods, not a property of the goods themselves (Ludwig von Mises Institute edition, 2007).

13. What a hard asset is: “A bitcoin worth a million dollars would be produced at exactly”

    Satoshi Nakamoto, “Bitcoin: A Peer-to-Peer Electronic Cash System,” October 31, 2008, section 6; the issuance schedule in the Bitcoin Core source code (halving every 210,000 blocks, initial subsidy of 50 bitcoin), github.com/bitcoin/bitcoin, retrieved September 2026.

14. How to think about the swings: “bitcoin’s price moved about 54% a year as of early 2025”, “The number has been coming down as the market has grown”

    iShares, “Bitcoin Volatility Guide: Trends and Insights for Investors,” 2025 (annualized volatility of about 54% as of January 31, 2025, described as having “notably declined” as the market matured), ishares.com, retrieved September 2026; S&P 500 long-run annualized volatility of roughly 15 to 20%, from the CBOE VIX historical series, cboe.com, retrieved September 2026.

15. How to think about the swings: “Daniel Kahneman and Amos Tversky showed that losses weigh on”

    Daniel Kahneman and Amos Tversky, “Prospect Theory: An Analysis of Decision under Risk,” Econometrica 47, no. 2 (1979); Tversky and Kahneman, “Advances in Prospect Theory,” Journal of Risk and Uncertainty 5 (1992), estimating that losses are weighted about 2.25 times as heavily as equivalent gains.

16. How to think about the swings: “Later work by Shlomo Benartzi and Richard Thaler showed what”

    Shlomo Benartzi and Richard Thaler, “Myopic Loss Aversion and the Equity Premium Puzzle,” Quarterly Journal of Economics 110, no. 1 (1995).

17. Twelve years of buying a little every month: “Here is roughly what $50 a month looked like, using historical monthly prices”

    Dollar-cost averaging figures: computed from Yahoo Finance monthly BTC-USD prices (each month’s purchase at the average of that month’s opening and closing price), $50 a month from January of the start year through September 2026, valued at $83,000 in October 2026; yourbitcoinbasics.com/ch6 DCA calculator. Monthly closes compiled by Digrin, digrin.com, from the Yahoo Finance series. Retrieved October 2026.

18. Twelve years of buying a little every month: “The Nakamoto Portfolio site, built by Swan, a company that sells bitcoin”

    Nakamoto Portfolio (Swan Research), nakamotoportfolio.com, retrieved September 2026.

19. Lump sum or a little at a time?: “A Vanguard study of more than 80 years of U.S. market data found”, “$1,200 spent at the end of November 2021 was worth about”

    Vanguard Research, “Dollar-cost averaging just means taking risk later,” July 2012 (lump-sum investing beat a 12-month schedule about two-thirds of the time in U.S., U.K., and Australian markets, 1926 to 2011); bitcoin month-end closing prices, BTC-USD (Yahoo Finance data, via digrin.com): November 2021 $57,005; October 2022 $20,496; January 2023 $23,139; December 2023 $42,265; September 2026 $83,554 (retrieved October 2026).

20. HODL: a strategy with a typo for a name: “On December 18, 2013, with the price falling hard, a forum user”

    GameKyuubi, “I AM HODLING,” bitcointalk.org, December 18, 2013.

21. HODL: a strategy with a typo for a name: “The record of ordinary people who try this, in stocks and in bitcoin”

    Brad Barber and Terrance Odean, “Trading Is Hazardous to Your Wealth,” Journal of Finance 55, no. 2 (2000): households that traded most earned the lowest returns.

22. HODL: a strategy with a typo for a name: “Somewhere around 4% of the people on earth own any bitcoin”

    Global adoption estimate: River, “Bitcoin Adoption Report 2025,” March 2025 (about 4% of the world’s population owns bitcoin), river.com.

23. HODL: a strategy with a typo for a name: “It ran through the collapse of its largest exchange in 2014”

    Network uptime and events: two brief chain-split incidents, August 2010 (CVE-2010-5139) and March 2013 (Bitcoin Core BIP 50), together under a day of downtime since January 3, 2009; Mt. Gox bankruptcy filing, February 28, 2014; China mining ban, May to June 2021; FTX bankruptcy filing, November 11, 2022.

24. HODL: a strategy with a typo for a name: “A writer named Nassim Taleb popularized a rule of thumb”

    Nassim Nicholas Taleb, Antifragile, Random House, 2012.

25. HODL: a strategy with a typo for a name: “A website has counted more than 400 published articles declaring Bitcoin dead”

    Bitcoin obituaries count: 99Bitcoins, “Bitcoin Obituaries” (477 entries), 99bitcoins.com, retrieved September 2026.

26. Savings, or speculation?: “New bitcoin still arrives, about 0.8% a year as I write”

    New issuance: 3.125 bitcoin per block after the April 2024 halving, about 144 blocks a day, about 450 bitcoin a day; annual issuance about 164,000 against about 20.1 million in existence, about 0.8%.

27. Worth repeating: “In the summer of 2024, the German state of Saxony sold”

    Saxony sale: Medienservice Sachsen, “Notveräußerung von fast 50.000 Bitcoins abgeschlossen,” press release, July 16, 2024 (49,858 bitcoin sold between June 19 and July 12, 2024, for about 2.64 billion euros, an average of about 52,900 euros each), medienservice.sachsen.de, retrieved September 2026.

28. What a hard asset is

    Chainalysis, “Bitcoin’s Circulating Supply,” June 2020 (about 3.7 million bitcoin estimated lost, based on coins that had not moved in five or more years); River, “How Much Bitcoin Is Gone Forever?,” September 6, 2023, updated July 2026 (3 to 4 million bitcoin; a separate River study puts about 1.6 million lost to self-custody mistakes alone), river.com, retrieved October 2026.

29. Wanting what your neighbor wants: “The French thinker René Girard spent his career on one observation” (now on the chapter page, under More from this chapter)

    René Girard, Deceit, Desire, and the Novel: Self and Other in Literary Structure, 1961 (English translation, Johns Hopkins University Press, 1965); for a plain-language introduction, Luke Burgis, Wanting: The Power of Mimetic Desire in Everyday Life, St. Martin’s Press, 2021.

30. Wanting what your neighbor wants: “A study of American households found that people who socialize” (now on the chapter page, under More from this chapter)

    Harrison Hong, Jeffrey Kubik and Jeremy Stein, “Social Interaction and Stock-Market Participation,” Journal of Finance 59, no. 1 (2004): 137-163.

31. Wanting what your neighbor wants: “A Finnish study using a whole country’s records found that people” (now on the chapter page, under More from this chapter)

    Markku Kaustia and Samuli Knüpfer, “Peer Performance and Stock Market Entry,” Journal of Financial Economics 104, no. 2 (2012): 321-338 (entry rose after neighbors’ positive returns; negative returns had no matching effect).

32. Wanting what your neighbor wants: “Every fall was the same people discovering that their model” (now on the chapter page, under More from this chapter)

    Girard’s distinction between destructive rivalry and imitation of a model who wants good things runs through his later work; see René Girard, Things Hidden Since the Foundation of the World, 1978 (English translation, Stanford University Press, 1987), and the discussion in Burgis, Wanting, part 2.

33. Who holds bitcoin now: “The figure below shows roughly how the 21 million divide up today” (now on the chapter page, under More from this chapter)

    Ownership shares: River, “Who owns the most bitcoin in 2026?,” river.com (ETFs and funds about 1.5 million; public companies more than 1 million; private companies about 312,000; Satoshi about 968,000; lost about 1.6 million, a low estimate); coins not yet mined computed from the issuance schedule in the Bitcoin Core source code, github.com/bitcoin/bitcoin (retrieved October 2026). Shares are of the 21 million cap and rounded.

34. Savings, or speculation?

    Terence Michael, Proof of Money: The Big Idea Behind Bitcoin, 2023.

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