Cryptocurrency is again going through a crash and has lost much of its value since its peak. Bear markets are not unusual for digital assets, and many large firms and exchanges have closed down as a result of the much-feared ‘crypto’ dip.
Since BTC’s humble beginnings as a nascent asset class, the world’s largest cryptocurrency by market capitalization has gone through many revolutions, creating major shifts for how the crypto market continues to operate.
The crypto market has gone through multiple cycles, rising and falling for a different reason each time. In this article, we explore each major bear market and dissect the possible reasons as to why the market crashed in each one.
One notable pattern has been present in all of these downward market movements and that is everytime BTC’s price fell, the rest of the cryptocurrency market fell too.
2011
Around this time, the only notable cryptocurrency in the market was BTC. People were still experimenting with the technology and its use cases were yet to be drawn out into the masses the way it is today. Initial price movement showed the price of Bitcoin surged to an all-time high of $32 from $0.30.
The momentum could not sustain and the price of Bitcoin fell to a low of $2 dollars. The main reasons for this fall was stretched out liquidity, major hacks, and a lack of proper monitoring and security systems for Mt Gox, a well-established cryptocurrency exchange at the time.
This would be the first time Bitcoin’s price would crash and resemble something close to a bear market, although the level of market involvement and institutional players was not as prominent.
2013 – 2015
Fast forward two years and Bitcoin would go on to appreciate considerably in terms of price, beginning to gain some level of recognition as an asset with a heavy price and not just a cheap digital currency. In 2013, Bitcoin reached a high of $1,150 by year end and within a period of two years, the price sunk to a low of $200 in 2015.
A main event that occurred during this time was the collapse of Mt Gox, a cryptocurrency exchange that was created by Jed McCaleb and was one of the largest digital asset exchanges. A general slowness in adoption coupled with regulatory issues were reasons for the downturn, marking a crypto winter in BTC’s price history.
2018
By this point in time, the crypto market started to show some signs of development, with huge growth in the number of available cryptocurrencies for investments. This created an entry of massive amount of cryptocurrency projects and ICOs (also known as Initial Coin Offering), looking to grab a slice of the growing market share. This created a frenzy in the market, with the speculative activity leading to an eventual bubble.
When the bubble burst, two of the largest bluechip cryptocurrencies in the market, Bitcoin and Ethereum, crashed in price, losing 84% and 90% in value respectively. This period was also marked by a tightening of rules for digital assets, regulatory crackdowns, and no support from institutions.
2022
Aggregation of crypto-technology and cryptocurrency products accelerated at a rapid pace by this time. Crypto exchanges, investment firms, crypto custody firms, and other organizations with different specializations started to enter the market.
The level of speculative activity, experimentation with stablecoin and related derivative products, and poor operating practices within centralized exchanges led to a huge crash in the market. Significant players in the crypto industry such as Three Arrows Capital, FTX, Celsius capital, Three Arrows Capital, and the Terra network experienced severe downturns and massive losses in investor funds, forcing a legal crackdown on fraudulent practices, lack of compliance, and mismanagement of funds. In the process, over $2 trillion was erased from the total market capitalization of cryptocurrency.
2025
The current market is undergoing a bear phase, with a drop from an all time high of $126,000 to below $90,000. At the time of writing, the price of BTC continues to sink. Major outflows from ETFs and centralized crypto exchanges have been noted as well.