A look at when the crypto market crashed three times and returned to new records

Of CNBCTV18.com September 27, 2022, 4:28 p.m IST (updated)

The current bear market has caused investors, traders and crypto projects a lot of pain. The prices of many of the top cryptocurrencies have fallen 70 percent or more from their all-time highs in November 2021. As a result, countless individuals have lost their entire savings and several crypto firms have collapsed. However, there is hope at the end of the tunnel.

The crypto market is cyclical. This means that it usually reverses after a low. In many cases, cryptocurrencies come back stronger and record new highs after a crash. This may be difficult to imagine given the current market situation. However, this pattern has been observed in the past and many experts believe it will repeat itself in the coming months. Follow along as we look back at three crashes in the crypto market that led to new highs in the past.

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The first bear market of 2011

Back in 2011, when most people weren’t even aware of cryptocurrencies, Bitcoin crashed from $32 to $2 between July 2011 and January 2012. That’s a 93 percent drop in just a few months. However, prices began to rise again, eventually surpassing the previous ATH by 2013.

The bear market from 2014 to 2016

The next bear market came a couple of years later, towards the end of 2013. The price of BTC fell from $1,135 in December 2013 to $175 in January 2015. The selloff was partly triggered when Mt Gox, the largest Bitcoin exchange in operation, announced that it was hacked, and the attackers had gotten away with 850,000 Bitcoins. That amounts to a loss of nearly $17 billion at today’s exchange rates, making it the biggest crypto hack to date.

The crypto market reacted badly to the hack as BTC lost almost 85 percent in value. Fortunately, the price of BTC began to recover in August 2015, retracing its steps back to the $1,000 mark by January 2017, before registering a new peak of $1,200 by April of the same year.

The 2018 bear market and its massive turnaround

The price of BTC fell from $19,640 in December 2017 to $3,185 in December 2018. There were several reasons for the decline, including an attack on Coincheck, one of the largest Japanese crypto exchanges, and the SEC’s rejection of Bitcoin-based exchange-traded funds (ETFs). These factors combined resulted in BTC dropping almost 84 percent during these 12 months.

Fortunately, like the other two crashes mentioned before, the price of BTC eventually returned to the $20,000 mark by July 2020 before reaching its current all-time high of $69,000 in November 2021.

The current bear market

The current bear market has lasted for several months now, with BTC currently trading at $20,228 and the global market cap of the crypto industry at $958 billion. That’s less than a third of the record high of $2.9 billion from 2021.

However, several experts, such as CEO and co-founder of Binance, Changpeng Zhao, have stated that the bear market is ‘healthy’ for the crypto industry in the long term. Many investors and traders also believe that such market corrections weed out all the difficult crypto projects and ensure that only the good ones survive. Moreover, they also give market participants a chance to buy their favorite cryptos while prices are low.

Furthermore, this is the last week of September, which has been one of the worst months for cryptocurrencies in the last six years. The price of BTC has fallen six times over the past 8 September. As such, many investors have even dubbed the month “Shocktember”. Fortunately, October is a relatively good month for crypto, with prices often turning around and starting to rise at this time of the year. That’s one of the reasons why traders refer to October as Uptober.

Conclusion

The crypto market can be very volatile, but it seems to follow a cycle of ups and downs. By this logic, a strong bull market should follow today’s bear market. And if historical data is to be believed, we could be in for new highs in the coming months and years.