Black Thursdays: Bitcoin's 5 Worst Crashes

Only a few people are old enough to remember what happened on exactly this day almost a century ago. Those who do likely wish they didn’t.

It was Oct. 24, 1929, better known as “Black Thursday,” after a financially booming decade came to an end when Wall Street traders woke up to a stock market that suddenly tumbled 11% from the night before. Larger falls continued for the next two years and eventually the country went into a decade-long economic depression.

This article is part of CoinDesk's Trading Week.

In observance of the occasion – and, oh yeah, it’s Trading Week at CoinDesk – we decided to look back at some spectacular crypto crashes.

If you’re what people would call an "OG" cryptocurrency investor, you probably either made the best or worst decision of your life in June 2011.

“Hey guys, it’s Nick. I just witnessed a very dramatic price crash in bitcoin,” a YouTuber with the handle BookofNick told his followers in a video. Bitcoin (BTC), the only cryptocurrency that was circulating back then, had crashed from $17.50 to 1 cent.

“That’s right, people, we’re buying bitcoin at one penny,” Nick said.

The crash occurred when an exchange called Mt. Gox, which in the early years of crypto was handling over 70% of all bitcoin transactions, got hacked. Mt. Gox eventually filed for bankruptcy in 2014 after losing almost 750,000 of its customers’ bitcoins.

On other exchanges, bitcoin’s low that year was around $2, and the cryptocurrency ended the year at around just under $5.

Two years later, more people outside of the narrow crypto spectrum had started paying attention to the latest “internet currency.” The entrepreneur-turned-TV-personality Kevin O’Leary, for example, explained that bitcoin was a safe haven for people who don’t trust any other currency and that it was “here to stay.”

Michael Saylor, then CEO of software vendor MicroStrategy, tweeted on Dec. 13, 2013: “#Bitcoin days are numbered. It seems like just a matter of time before it suffers the same fate as online gambling.”

(Yes, this is the same Michael Saylor who’s now one of bitcoin’s biggest evangelists.)

The year 2013 was also when China made its first mark on bitcoin: The Chinese central bank issued a warning against using bitcoin as legal tender. The price of bitcoin dropped over 50%, from a then-all-time high of $1,200 to less than $600.

Edward Moya, a senior analyst at foreign-exchange broker Oanda, says he started hearing about bitcoin in 2014, when it was trading at around that range.

“I was like, it’s basically lost half its value and there’s these people saying it’s going to $100,000 and it’s even going higher because global central banks are being reckless, and this is how I'm taking control of what I own,” he said. “I was stunned.”

The fact that the bitcoin price was constantly crashing just added to the fascination. “Just seeing which type of investors were supporting this movement” kept him interested, he says, even though he wouldn’t buy in just yet.

If you look at the current price of bitcoin ($19,592 as of press time) and its price five years ago, some skeptics might argue that no progress has been made.

But back in December 2017, when bitcoin’s value topped $20,000 for the first time, traders were astounded – and many early buyers of the original cryptocurrency were suddenly very rich.

But what goes up must come down. Just 12 days later, the crypto asset crashed to $12,840.

And this time, it wasn’t just bitcoin that was hit by the crash. Other established crypto assets, such as Ethereum’s ether (ETH) and Bitcoin Cash’s BCH, lost value, too.

It’s hard to forget March 2020, when the COVID-19 pandemic hit the U.S., a life-altering event in just about every way imaginable.

As a result, the stock market lost 13% on March 16, nicknamed "Black Monday," as the pandemic’s potentially devastating impact on the economy suddenly became undeniable. The growing uncertainty caused a crash in crypto assets, considered among the riskiest assets of all.

Bitcoin fell by 57% to a low of $3,867 after having traded near $10,000 in the previous month. Ether, the second-largest cryptocurrency by market value after bitcoin, fell 46% that week.

“Since I knew stocks would recover eventually, I kept what I had already accumulated and added to it,” said Bob Iaccino, co-founder and chief market strategist at Path Trading Partners.

In a strange epilogue, the pandemic ultimately helped crypto gain more mainstream attention. Over the next several months, Wall Street banks and investment firms including BlackRock, AllianceBernstein, Morgan Stanley and Tudor Investment started buying billions of dollars' worth of bitcoin. PayPal announced it would allow 346 million customers to hold bitcoin. JPMorgan Chase CEO Jamie Dimon, a longtime bitcoin naysayer, said that cryptocurrency had "considerable" price upside.

Eventually, on Dec. 16, 2020, bitcoin pushed past $20,000, eclipsing the previous all-time-high and reaching $29,374 by the end of 2020. What started as a crash ended in a rally.

After a 2021 that was arguably the most successful year for the crypto industry, the reckoning came swiftly.

First came the crash of Terra, a blockchain with its own dollar-linked stablecoin, UST. The UST token was supposed to retain a value of $1, but the price came unpegged – and soon traders also lost confidence in the blockchain’s native cryptocurrency, LUNA, whose price eventually would tumble 99%.

The implosion dragged digital-asset markets lower, including bitcoin’s price. It didn’t help that the U.S. Federal Reserve was rapidly raising interest rates to slow the pace of inflation – putting downward pressure on prices for all assets considered to be risky, from stocks to cryptocurrencies.

Casualties of the rapid market sell-off included Three Arrows Capital, which was once considered one of the savviest crypto hedge funds.

Then, on June 12, Celsius Network, one of the biggest and most successful crypto lenders, informed users that it had frozen their assets due to “extreme market conditions.”

Bitcoin lost nearly 37% in June alone, dropping from $32,000 to below $18,000. Ether dropped 44%.