A brief history of Bitcoin crashes and bear markets: 2009–2022

Bitcoin (BTC), which experienced one of the most severe crashes in its history, fell below $20,000 in June 2022 after a peak at $68,000 in 2021.

June 2022 was the worst month since September 2011 when Bitcoin’s monthly losses topped 40%. Also, the cryptocurrency suffered its worst quarterly loss in 11 years.

The current market sell-off does not make Bitcoin crashes or bear markets exclusive to 2022. Bitcoin has been through many crypto winters since its first block (or the genesis block) was mined in January 2009.

Cointelegraph has identified five notable price drops in Bitcoin’s history as we zoom out on the price chart.

No. 1: Bitcoin crashes from $32 to $0.01 2011

Time to retest the previous high: 20 Months (June 2011-February 2013,

In late April 2011, the Bitcoin price reached $1.00, its first significant psychological milestone. This was to kick-start its first ever rally that saw it reach $32 on June 8. 2011. The joy was short-lived as Bitcoin’s value plummeted to $0.01 in a matter of days.

Security issues at Mt. Gox, a Japanese cryptocurrency exchange that traded most of Bitcoin at the time, was responsible for the sharp sell-off. A security breach on the exchange’s platform led to 850,000 BTC being stolen. This raised serious concerns about the security and integrity of Bitcoin stored on exchanges.

The June 2011 Bitcoin flash crash was a significant event in Bitcoin history. BTC lost nearly 99% of its value within a matter of days. This event opened a long period of time before Bitcoin’s price recovered to its previous high of $32. It climbed to new heights in February 2013.

Nice #bitcoin crash at 0.01 USD/BTC. http://t.co/jNx8rAr
— Who knows? BTC (@who_knows), June 19, 2011.

Comparing to the more recent charts, it is difficult to track Bitcoin’s price before 2013. CoinGecko and CoinMarketCap, popular price tracking sites, do not track Bitcoin prices prior to April 2013.

Bobby Ong, CoinGecko chief operating officers, stated that Bitcoin was still in its infancy before 2013. There weren’t many places that traded Bitcoin back then. He said that CoinGecko had not received many requests to access pre-2013 data and it is therefore low in priority.

Bear market No. 2: Bitcoin prices dropped from $1,000 to $200 in 2015

Time to retest the previous high: 37 Months (November 2013-January 2017,

Cointelegraph’s BTC price data shows that Bitcoin reached $100 in April 2013, and then surged briefly to $1,000 in November 2013.

Bitcoin fell to $700 in a bear market just one month after it broke $1,000 for the first-ever time in its history. The Chinese central bank started to crackdown on Bitcoin in the late 2013 and banned local financial institutions from processing BTC transactions.

Over the next two-years, cryptocurrency plummeted further. It reached a bottom of $360 in April 2014. Then it dropped even further to $170 in January 2015.

Bitcoin price chart April 2013-January 2017 Source: CoinGecko

The hack Mt. Gox crypto exchange stopped all Bitcoin withdrawals early February 2014. The platform suspended trading and filed for bankruptcy in Tokyo as well as the United States.

Several financial institutions raised concerns about Bitcoin. The U.S. Commodity Futures Trading Commission claimed that it was able to control “Bitcoin price manipulation” as late 2014.

The sentiment surrounding Bitcoin was mostly negative up until August 2015. When the trend began a long-term reverse, it became more positive. Despite the bullish market, Bitcoin finally returned to the $1,000 mark in January 2017. This was the longest period of high price recovery in Bitcoin’s history.

Bear market No. 3: Bitcoin drops below $3,200 after reaching $20,000 in December 2017.

Time to retest the previous high: 36 Months (December 2017-December 2020).

Bitcoin recovered to $1,000 in January 2017 and rallied to $20,000 at the end of 2017.

The triumph of $20,000 was however short-lived. Bitcoin lost over 60% in just a few months, much like the historical peak of $1,000 at Bitcoin.

As the Bitcoin market continued to shrink, 2018 was quickly referred to by many as “crypto winter”. In December 2018, BTC reached its lowest point at $3,200.

Coincheck, a Japanese cryptocurrency exchange, was the first to experience security problems during crypto winter. Coincheck was the victim of a massive hack that resulted in a loss amounting to $530 million in NEM (XEM).

In March 2018 and June 2018, tech giants Facebook and Google, respectively, banned advertising for token sales and initial coin offerings on their platforms. This further accelerated the bear market.

Global crypto regulation efforts also contributed to the bear markets, with the U.S. Securities and Exchange Commission rejecting applications for BTC exchange traded funds.

Bitcoin price chart, December 2017-December 2020 Source: CoinGecko

No. 4: BTC falls from $63,000 to $9,000 in 2021

Time to retest the previous high: Six months (April 2021-October 20,21).

The crypto market was dominated by bearish sentiment until 2020. Bitcoin reached $20,000 again and then entered a huge bull run that reached $63,000 in April 2021.

Despite 2021 being one of the most important years for Bitcoin with the cryptocurrency reaching a $1 trillion market capital, Bitcoin still suffered from a small drawback.

Bitcoin’s price dropped to $29,000 within three months, shortly after it reached new highs in mid April.

The mini bear market in 2021 was triggered by a media story that Bitcoin mining poses a problem with corporate governance (ESG).

Global ESG-related FUD surrounding Bitcoin was further exacerbated by Elon Musk’s electric vehicle firm Tesla withdrawing Bitcoin as payment in May. The CEO cited ESG concerns. Three months later, Musk revealed that approximately 50% of Bitcoin mining was done using renewable energy.

The cycle of FUD pic.twitter.com/OC8kGXAUSd
— Lina Seiche (@LinaSeiche) June 20, 2021

Despite China’s major crackdown on local miners, the bear market did not last long. By July’s end, the bullish trend had returned and Bitcoin soared to $68,000 in November 2021.

Bear market No. 5: Bitcoin drops from $68,000 to under $20,000 in 2022

Time to retest the previous high: To be determined

Bitcoin fell below $70,000 in 2021 after it failed to surpass that mark. Since November 2017, the cryptocurrency has fallen into a bearish market and experienced one of its largest historical crashes in 2022.

Extreme fear arose on the market when the cryptocurrency fell below $20,000 in June for the first time since 2020.

The current bear market can be attributed to the crisis in algorithmic stablecoins, namely TerraUSD Classic (USTC stablecoin), which are designed to support a stabil 1:1 peg with U.S. dollars through blockchain algorithms and not equivalent cash reserves.

USTC, once an important algorithmic stablecoin (and a peg dollar), lost its dollar peg May. As the USTC stablecoin was the third largest in existence, the depegging caused panic on wider crypto markets.

Due to large liquidations and uncertainty, the collapse of Terra had a major impact on the rest of crypto market. This led to a cryptocurrency lending crisis. Due to inability to maintain liquidity under severe market conditions, Celsius and other global crypto lenders had to suspend withdrawals.

Bitcoin’s price has traded below its previous highs for over three years. It’s still unknown when and where Bitcoin will return to its previous heights of $68,000, which occurred just seven months ago.