A Brief of Bitcoin Crashes: 2009-2022

Unlike other solutions for traders such as stocks when the rate is based on the companies’ performance, Bitcoin does not have an underlying asset. The Blockchain ecosystem is based on other principles, including the security and transparency of payments. The cryptocurrency rates often depend on third-party factors — news, changes in financial legislation, tweets from influential people, and political and economic crises.

Blockchain is considered a specific ecosystem. Most fluctuations take place solely on the assumptions of investors and their vision of the future prospects of the market. As a result, the price of Bitcoin can go down dramatically even within 24 hours, causing the boom again and again. Thousands of novice investors become bankrupt because of such incidents. There have been many cases that confirm this. Let’s look at some incidents and causes in more detail.

Blockchain Implementation Stages

In April 2011, the price of BTC increased to $1. This was the first step in the introduction of a new payment tool which many users were very skeptical about. But by June 8, it had reached $32 which arouse interest from digital world enthusiasts. Users looking for quick money could not miss the chance to enrich themselves through 20 times growth.

Although the boom ended in a matter of days at a cost of just $0.01. Users did not expect such a steep dive. The sell-off was due to the problems of Mt.Gox, the Japanese platform. The ill-wishers greatly upset hundreds of users who created their wallets on this exchanger website. Nearly 850,000 coins were stolen, raising serious concerns about the Blockchain ecosystems’ security. But that was only the beginning.

The price of BTC reached $1,000 as early as April 2013. It was another boom that presupposed a fall in the price. Large investors and traders were not sure that the stable rate would last more than 6 months. As predicted by analysts, this happened when China’s central bank issued a ban on transacting through the Blockchain ecosystem. Although the negative changes affected not only the Asian market.

Price Fluctuations Within $1000-20000

Most major financial institutions have been confused about the US CFTC saying it will deal with “BTC rates manipulation”. Due to continuous bans, the price of BTC continued to fall over the next 2-3 years, peaking at $350+ and then falling even lower, reaching $170 in 2015. Even so, the price went back to $1,000 in 2017. Although no one imagined that by buying assets at such a rate it would be possible to enrich themselves by 20-30 times.

After recovering to $1,000 in 2017, BTC continued to grow and increased 20 times in 10 months but lost over 60% of its value within a few days. In early 2018, the Coincheck platform suffered a hack. As a result, the NEM lost $500+ million. This incident caused distrust by many users and the price dropped to almost $3,000. Moreover, the owners of FB and Google have banned using digital currency to launch ads.

The Most Problematic Cases in 2020-2022

The recent crash of BTC took place in June 2022. The incident was instigated by Celsius Network, a large American lending company. After platform owners blocked BTC-based payments and transfers, making excuses for “extreme” conditions, the rate of some coins go down sharply — below $1 trillion for the first time since last summer.

China’s ongoing fight against cryptocurrencies also plays a role. Most incidents happened after 2020. In the summer of 2021, banks and financial institutions in China had to stop cryptocurrency transactions due to a government decision. As a consequence, in autumn 2021, most transactions using digital currency were declared illegal. This was compounded by a crisis caused by then-U.S. President Donald Trump who assured in his interview that BTC was a scam.

The legalization and adoption of Bitcoin in the United States significantly affect the entire market. Most fluctuations in the exchange rate are connected precisely with the state of affairs in this country. For example, in 2021, Tesla’s CEO said that the global car manufacturer would not accept such payment tools due to confusion about the environmental impact. As a result, investors lost up to 10% of their assets.

The Biggest Crashes Due to Fraudulent Schemes

In 2021, the UK FCA announced illegal the largest platform, Binance. Leading banks in this country, such as Santander and HSBC, have blocked users from sending money through this platform. Such incidents associated with high risks of fraud have significantly affected the BTC ecosystem. Such a practice is also common in other markets, including Germany and the US. If you want to be aware of such changes, follow the news through platforms such as ICOholder. On this website, people can find the most detailed analytics.

Key Takeaway

For people who invest in digital assets for the long term using a “buy and hold” strategy, price fluctuations should be expected. According to hundreds of experts, novice traders should not worry about big falls. Do not sell your own assets during unstable market downturns. Although we should not forget about the diversification of fund portfolios. Experts recommend keeping your investments in cryptocurrency no higher than 15% of your total funds.