Throughout its 10-year history of formation and development, how many times has Bitcoin (BTC) crashed? Let’s take a look back at the 6 deepest price crashes of Bitcoin here!
Bitcoin is known as a global phenomenon thanks to its ability to break through price thresholds that few other markets can achieve. Bitcoin and blockchain technology brought a breath of fresh air to the financial market at the time, with advantages in decentralization, passwordless access networks, personalized information, and more.
Some argue that Bitcoin is a bubble (according to Brian Kelly) because uncontrolled price increases will lead to the risk of bursting, along with evidence of BTC’s decline. On the other hand, the community believes that Bitcoin and Altcoins are all following Elliott waves, meaning that there will be increases and decreases, and the potential of Bitcoin is still quite large.
To have the most accurate view, Coin98 invites everyone to “travel back in time” to look back at Bitcoin’s milestones in the past. Moreover, each milestone will be a tool to help us make investment projections.
Understanding Bitcoin
Bitcoin (also known as BTC) is a digital currency released as open source software and invented by Satoshi Nakamoto. This is the first cryptocurrency in the world, laying the foundation for the development of the crypto market.
Bitcoin uses the P2P (peer-to-peer) protocol for all transactions, eliminating the intermediary step in the transaction process and not having to go through any organization or individual.
Bitcoin brings innovation to the financial world. In the traditional market, fiat currencies such as USD, VND, EUR,… will be controlled by the central bank or government. Bitcoin is not like that, this platform allows everyone to access, use, and trade peer-to-peer, without being controlled by a third party and with almost zero transaction fees
Many people still mistakenly believe that it is the price increase that gives value to Bitcoin, but in reality, the value of BTC lies in blockchain technology and distributed ledger technology (DLT). The increase and decrease in price only reflects the law of supply and demand and shows market sentiment.
If you pay attention, the data in the past will help us assess the psychology of the majority of investors in the crypto market, and determine the increasing/decreasing months of Bitcoin. You can refer to the overview of BTC each month through the following image.
The main stages of Bitcoin’s formation and development over time:
- January 2009 – July 2013: Bitcoin is born.
- August 2013 – December 2017: Bitcoin attracts attention from the community.
- January 2018 – December 2020: Bitcoin recovers and grows strongly.
- January 2021 – June 2022: Bitcoin is being affected by more regulations and pressure.
6 of Bitcoin’s deepest and most memorable crashes
Let’s turn back time and look at the times BTC crashed the most during Bitcoin’s more than 10 years of formation.
June 2011 (-99%)
BTC dropped from $32 to $2
Surely, anyone who participated in the market from 2009-2011 will not forget Bitcoin’s golden age, when the price soared from $2 to over $32.
The sharp price increase brought many risks. On June 19th, Mt.Gox – the world’s largest Bitcoin exchange at the time – announced that hundreds of accounts had been hacked. The exchange suddenly stopped all services and froze tens of millions of USD on the exchange.
Hackers attacked and stole 25,000 BTC, which caused Bitcoin’s price to fluctuate and drop sharply at that time, specifically falling from $16 to $2. The lost funds were reportedly returned to users, and Bitcoin gradually increased in the following year.
This was the exchange’s first hack. Six weeks later, four more hacks occurred in quick succession, with total losses exceeding 178,000 BTC. However, numerous investors could not resist the allure of BTC and disregarded a series of bad news, still deciding to venture into investing.
Period of July 19 – August 19, 2012 (-56.3%)
BTC dropped from $13 to $8
In August 2012, a scheme called Ponzi was introduced to the community with the Bitcoin Savings & Trust mechanism. Trust was quickly built along with the promise of 7% weekly returns, attracting countless investors large and small.
The scheme began to collapse when Trendon Shavers – the person behind the Ponzi pyramid scheme – announced that the interest rate would be reduced to 3.9% (August 1, 2012).
According to various authorities, Ponzi was a complex scam that Shavers set up to manipulate investor assets, estimated to have collected more than 700,000 BTC. After returning a portion, New York prosecutors reported that Shavers had defrauded approximately 146,000 BTC (worth $807,380 USD).
Learn more: Why do many Crypto investors still fall for Ponzi schemes?
This fraud resulted in Shavers receiving an 18-month prison sentence and facing a potential 40-year sentence, along with other penalties such as the forfeiture of $1.2 million and restitution of $1.2 million to the victims. This affected the price of BTC, which dropped from $13.5 to $8 (August 19, 2012).
Period of April 10-12, 2013 (-82.6%)
BTC dropped from $259 to $50
From mid-2013, BTC attracted strong community attention, with many investors rushing to pour money in to find opportunities to “get rich.” Forums and media simultaneously reported on Bitcoin and its potential. At that time, Mt.Gox was considered the most popular exchange. At its peak in 2013, the exchange processed over 70% of all Bitcoin transactions worldwide.
Due to the massive transaction volume, Mt.Gox suffered from leaked security vulnerabilities and was severely impacted by a Bitcoin hack. The price of BTC dropped sharply from a peak of $259 to a low of $50 (over 80%). Easily noticeable price milestones can be seen in the evidence below.
Other opinions suggest that the hack had occurred as early as 2011 but was explained as the assets being transferred to a safer address, causing the incident to be forgotten. Although Mt.Gox reaped rewards due to the rising price of BTC, the exchange was technically insolvent for nearly two years before the hack was publicly disclosed.
Period of November 30, 2013 – January 14, 2016 (-86.9%)
BTC dropped from $1,163 to $152
After the “power outage” in April 2013, BTC fluctuated around the $120-$130 mark and did not exceed this price range. Until November 30, 2013, BTC surpassed the $1,000 threshold (an increase of over 7,661%) within the year. Many analysts believed that Bitcoin’s uncontrolled growth was a digital bubble, with the media being seen as the driving force behind it.
The keyword “Bitcoin” was added to the Oxford online dictionary, and search interest surged from September 2013 (according to Google). A series of events and mainstream media coverage of Bitcoin led many investors to pour money into the platform (FOMO/FUD), and the subsequent consequence was a sharp price drop when supply and demand became imbalanced. BTC fell to $400 (after reaching an all-time high two weeks prior) and recovered to $1,000 in January 2014.
While many investors had high hopes for Bitcoin to break new peaks, another “disaster” struck. On February 7, 2014, Mt.Gox was hacked again. The event spiraled out of control, and the company went bankrupt at the end of February 2014
The story doesn’t end there. Mark Karpeles, CEO of Mt.Gox, was accused of illegally manipulating customer accounts by falsifying data. The Tokyo District Court placed Mt.Gox into bankruptcy proceedings, demanding compensation for users’ losses (April 2014).
The losses amounted to 850,000 BTC, including 750,000 BTC deposited on the exchange and 100,000 BTC belonging to the company (estimated at $423 million USD); representing approximately 7% of the total BTC in circulation. The price of BTC plummeted that day to $152 (January 14, 2015).
Period of December 17, 2017 – December 16, 2018: (-83.6%)
BTC dropped from $19,666 to $3,220
2017 is considered Bitcoin’s boom year. On December 17, 2017, shortly after Thanksgiving, BTC reached a new peak of nearly $20,000 (an increase of approximately 40%). Exchanges (such as Binance), projects, and new investment models (ICOs, etc.) were established during this period. However, the excessive price increase, a crypto bubble once again, caused BTC’s price to plummet to below $12,
From late 2018, Bitcoin had decreased by more than 50% (Tradingview). In addition, several major hacks in South Korea, China, and Japan, as well as rumors that these countries were planning to ban Bitcoin, caused many investors to seek an exit and simultaneously “dump” their holdings. This event caused the price of BTC to fluctuate, gradually decreasing to a bottom of $3,220 (December 15, 2018).
Period of June 26, 2019 – March 13, 2020: (-60.8%)
BTC dropped from $12,867 to $5,040
Crypto is a new market, with both potential and considerable risks. Although decentralized, objective factors (political, social, etc.) can affect the entire market. In mid-January 2020, the context of the Corona pandemic caused many markets such as stocks, forex, and crypto to begin to plummet.
Crypto, after three years of relentless growth, experienced a freefall due to the pressures of the economy at that time. The price of BTC hit a bottom of $3,760 (the lowest level in 2020). Many investors panicked and fled, leaving a sea of red across the market. That period is known as a “black swan” event and is etched in Bitcoin’s history.
To review the market developments after this major crash, you can refer to the following article: Looking back at the market after the horrific crash (March 13, 2020 – March 13, 2021)
A comprehensive overview of Bitcoin’s price history is also detailed in the following infographic:
Through its price history, it can be seen that the price of BTC always recovers strongly after each major crash. But how can one maintain composure and choose a reasonable entry point when BTC dumps and its price plummets? Refer to this article: What to do when Bitcoin crashes if I only and exclusively want to hold Bitcoin?
Conclusion
The crypto market always has many unexpected developments. Hopefully, the Bitcoin price milestones in this article will help everyone gain a more multifaceted perspective on the ups and downs in crypto.
For smart and highly effective investing, don’t forget to read more about the top 5 ways to “Follow” the crypto market for effective investment here
