@daily_btc_lore | Daily Bitcoin History Threads

June 28, 2013 | 13 years ago today

Bitcoin's First Summer LowBitcoin's First Summer Low

On June 28, 2013, Bitcoin was trading at $65 -- 75% below the $266 peak it had hit just 79 days earlier. Every major forum declared it dead. They were off by a factor of 19.

The Cyprus CatalystThe Cyprus Catalyst

Bitcoin opened 2013 at $13. The fuel for the spring rally wasn't speculative mania -- it was a banking crisis in Cyprus. In March 2013, the European Union threatened to seize a portion of Cypriot depositor savings to fund a bank bailout. The proposal was unprecedented: retail depositors, not just bondholders, would take losses. Money moved into Bitcoin almost immediately. By April 10, Bitcoin hit $266 on Mt. Gox, which handled roughly 70% of all Bitcoin transactions at the time -- a 20x run in three months, driven by the idea that Bitcoin was simply out of reach of any government.

The April CrashThe April Crash

The $266 peak lasted hours. Mt. Gox, overwhelmed by trading volume, suspended all trading for 12 hours to "cool down." When it reopened, the mechanics of the panic were fully set: sellers were queued and ready, but the buyers who had chased the run-up had gone quiet. Bitcoin fell from $266 to under $60 in four days. The exchange that was meant to be a circuit breaker had instead guaranteed that panic would be the only trade available when the market resumed.

The Federal SqueezeThe Federal Squeeze

The summer low wasn't just psychology. On May 15, the Department of Homeland Security obtained a seizure warrant for Mt. Gox's account with Dwolla, a US payment processor -- $2.9 million taken on the grounds that Mt. Gox's US subsidiary was operating as an unlicensed money transmitter. Funds in Mt. Gox's Wells Fargo account were also targeted. Then on June 20, Mt. Gox suspended all USD withdrawals, citing the need to improve its banking processes. As CoinDesk reported at the time (https://www.coindesk.com/markets/2013/06/20/mt-gox-temporarily-suspends-usd-withdrawals), deposits were still accepted and withdrawals in other currencies continued -- but anyone holding dollars inside Mt. Gox had no exit. The price fell back toward its April floor.

The Bottom -- and a Quiet ResolutionThe Bottom -- and a Quiet Resolution

On June 28, at $65, Bitcoin forums were full of obituaries. The timing of what happened next was remarkable: on June 29 -- the day after the summer low -- Mt. Gox received its money services business license from FinCEN, the regulatory clearance it had been seeking all spring. The exchange quietly unlocked USD withdrawals and resumed normal operations. No announcement heralded the bottom. Nobody rang a bell.

The RecoveryThe Recovery

October changed everything. Baidu, China's dominant search engine, began accepting Bitcoin as payment. Chinese retail investors entered en masse. Bitcoin climbed from roughly $130 in early October to over $500 by mid-November. The narrative had shifted from Cyprus bail-ins to Chinese speculation -- different fuel, same trajectory.

November 28, 2013November 28, 2013

Bitcoin hit $1,242 on Mt. Gox on November 28, 2013 -- exactly five months after the June 28 low of $65. Anyone who had bought at the summer floor and held through the obituaries made 19x in 153 days. The same exchange that froze USD withdrawals in June was setting all-time highs in November. Three months later, in February 2014, Mt. Gox would halt all Bitcoin withdrawals and collapse entirely. But on November 28, none of that was visible. Bitcoin was at $1,242. The people who bought at $65 were right.

Part of an ongoing series on Bitcoin history. This event falls on June 28, 2013.