Bitcoin is a polarizing topic, especially in the world of finance. The Bitcoin whitepaper promised to revolutionize traditional financial systems through decentralization, peer-to-peer payments, and battling inflation.
The rise of Bitcoin spurred incredible hype, with regular people rushing to embrace crypto during its meteoric price spikes. Some loyal followers, known as “Bitcoin Maxis,” view the currency as a solution to the problems inherent in the financial system.
But the journey has been a rollercoaster, with Bitcoin crashes and subsequent bull markets making headlines and leaving investors reeling. Famously, dozens of media and finance critics have declared Bitcoin dead, only for it to skyrocket once again in the months that followed.
In this article, we will recap the biggest Bitcoin crashes and the events surrounding them, so you can better understand the story of the world’s biggest blockchain.
Bitcoin’s price history is marked by market cycles that last around four years, coinciding with the Bitcoin halving schedule. And while this cycle dictates a lot of BTC price activity, there are also times when outside events exert their own impact. Let’s start with an overview of the nine biggest Bitcoin crashes, before explaining the context and causes behind each one.
Year | % Lost From BTC | Context |
June 2011 | 99% | Mt. Gox Hack |
August 2012 | 56% | BTC Ponzi Scheme |
April 2013 | 83% | Mt. Gox Crash |
December 2013 | 50% | China Ban |
December 2017 | 80% | Government crackdowns & hacks |
March 2020 | 50% | Covid-19 Pandemic |
May 2021 | 44% | China crackdown & Environmental concerns |
November 2022 | 25% | FTX Collapse |
September 2024 | 20% | Grayscale sell-offs, global economic uncertainty |
Two years after emerging from the digital ether, BTC reached an all-time high of over $32 (those heady days!). But the excitement was promptly followed by Bitcoin’s first major crash, in June 2011.
The crash was catalysed by an event that shook the whole crypto market. Hackers targeted Mt. Gox, the biggest Bitcoin exchange at that time, stealing millions of dollars worth of BTC. With a collossal amount of Bitcoin now siphoned to one whale (the hacker), and faith in crypto security shattered, investors became fearful, triggering a mass sell-off. The cryptocurrency’s value plummeted to just one penny in a single day. To date, this is the biggest crash Bitcoin has ever experienced.
In August 2012, a Bitcoin Ponzi scheme came to light. Trendon T. Shavers, also known as “Pirate” and “pirateat40”, was the founder of “Bitcoin Savings and Trust”. This fake company managed to amass 700,000 BTC, worth approximately $60 million at the time. The scammer deceived investors with promises of 7% weekly returns, resulting in the theft of 700,000 Bitcoins. The event
Even though the perpetrator was later charged and imprisoned, the damage was already done. The ensuing plunge in investor confidence caused another Bitcoin crash, with a 56% drop in BTC value shortly after the event.
In April 2013, Bitcoin’s rapid rise to $260 attracted heavy investor interest, overwhelming Mt.Gox, the leading Bitcoin exchange.
The high trading volume crashed the platform, and for a second time, hackers (thought to be Ilya Lichtenstein and Heather Morgan on that occasion) targeted the exchange, alleviating Mt Gox. of 850,000 BTC in the process. Even today, this remains the biggest crypto hack in history.
For a second time, the notorious crypto exchange would be at the centre of a sharp drop in BTC’s price. The coin’s value plummeted from $260 to $50, a dramatic 83% loss.
On 5 December 2013, China’s government imposed a ban on Bitcoin, barring financial institutions in the country from handling any Bitcoin transactions. The resulting uncertainty led to a Bitcoin price crash: the coin price went from $1,150 on 5 December to $694 on 20 December, losing around 40% of its value in that short time.
Above all, this marked the beginning of China’s ongoing restrictive stance toward cryptocurrency, which continues to influence the market today.
December 2017 marked a period of huge excitement for the Bitcoin community, with BTC reaching a new all time high of $17,000. However, as the bubble burst and crypto winter settled in, the overall sentiment in the market shifted. This caused investors to start cashing out, sending the price of BTC plummeting. Throughout 2018, rumors of government crackdowns and major exchange hacks in Korea and Japan further eroded investor confidence, leading to an 80% crash by the end of 2018.
As the COVID-19 pandemic triggered global market crashes, Bitcoin took a hard hit. In March 2020, the cryptocurrency lost half its value in just a week, falling from nearly $10,000 in late February to $5,000 by mid-March.
But this was just the first leg of BTC’s rollercoaster journey during the pandemic. Throughout the rest of 2020, BTC’s price would rise to nearly $30,000 in December.
After reaching a record high of $64,000 in April 2021, Bitcoin suffered a major crash in May. Over $1 trillion in value was wiped from the global crypto market as Elon Musk reversed Tesla’s acceptance of Bitcoin, China announced further crackdowns, and environmental concerns about Bitcoin mining surfaced. In just over a month, Bitcoin’s value plunged by 44%.
In November 2022, the cryptocurrency market was rocked by the collapse of FTX, one of the largest and most prominent cryptocurrency exchanges. Furthermore, FTX’s bankruptcy shook investor confidence, leading to a sharp decline in Bitcoin’s price by 25% over a few days, from nearly $21,000 to $15,000.
The FTX implosion, caused by fraud and financial mismanagement allegations, triggered a wave of panic selling across the market. The ripple effect extended beyond Bitcoin, with the broader crypto ecosystem suffering severe losses. As a result, many investors scrambled to withdraw their funds from exchanges, fearing further collapses.
In 2024, Bitcoin experienced multiple downturns of approximately 20%. The first came at the start of Q2, when Grayscale ETF continued to sell off the BTC, flooding the market and triggering a negative sentiment among investors.
The second crash came in early September when a combination of global economic uncertainty and concerns over interest rates, contributed to a broader decline in investor sentiment. Fears of a potential global recession led to bearish behavior in financial markets, with many investors moving away from speculative assets like Bitcoin.
BTC Dropped from over $64,000 in late August to a low of $53,000 in early September.
Bitcoin’s history is marked by dramatic crashes, but each downturn has had a low point higher than the previous one. The extent of the crashes has also evolved over time: some of the older BTC crashes reached 80-90%, while the most recent ones are much lower in the 20-25% range. This might be because major investment companies are now holding Bitcoin, making the market more stable than before and providing a new degree of legitimacy.
Despite the crashes, Bitcoin remains resilient and continues to attract investors and enthusiasts. Whether Bitcoin will experience another crash or soar to new highs is currently unknown but its history shows that it often recovers stronger than before.