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Ruth Kise 23 Aug 2023 ◦ 6 min read

How Big Is the 2022 Crypto Crash? A Historical Perspective

How Big Is the 2022 Crypto Crash? A Historical Perspective

This year started with a significant decline in the cryptocurrency market, which did intensify because of the geopolitical situation. Since the fall of 2021, crypto has been passing through the bear market and this trend continues to this day. And over the past one and a half to two months the main cryptocurrency has collapsed in price by almost 60%.

Are Crypto Market Crashes Really Bitcoin Crashes?

The correlation between cryptocurrencies has always existed to various extent.

Altcoins depend upon Bitcoin because of the formation of primary demand for digital currency around it. Almost half of all coin investments are in BTC. Large investment portfolios include Bitcoin as a core asset.

All large exchanges hold the bulk of liquidity in Bitcoin, as the largest volumes of transactions occur in trading pairs with BTC. Although the dominance index has shown steady growth in altcoins investment since 2017, Bitcoin still holds 40% of the entire market. The closest competitor, Ethereum, is 2 times behind it.

Thus, when Bitcoin collapsed from $48.2 thousand to $28.9 thousand, it dragged down all the altсoins. Ether is down 52% since January 2022 and now costs $1,800, Solana is down 74% to $45.87, Cardano is down over 64% and costs $0.4909.

If you're a newbie, then you might feel like it's a complete collapse of cryptocurrency. And seemingly with a good reason, because such a sharp and long drop in prices was a long time ago. However, the market has already faced crashes more than once. So we will look at the most important cases of bitcoin drops:

The Largest Bitcoin Drops to Date

It should be mentioned that any drop in prices is associated with their growth, and vice versa: a kind of swing that leaves no investor indifferent.

1: The Rollercoaster of 2011

The very first shock caused an unexpected rise of Bitcoin from $1 to $30 in early 2011. However, this wave of growth was followed by a staggering drop in the asset price in June 2011. During the period from June 8 to 11, the price of BTC fell by almost 50%, reaching $14.65.

Such a sharp jump is explained by the sudden increase in the hashrate to unprecedented values. Also, mentions in some mainstream media played their role.

On June 19, 2011, the Mt.Gox exchange was hacked, bringing down the price of Bitcoin to $0.01. It affected the accounts of 60 thousand users totaling more than $8.7 million. One week later, trade on Mt.Gox recovered, and the fall in prices after the hack became the largest in the history of Bitcoin.

2: The New Heights of 2013

The next shattering experience awaited investors for two whole years. In 2013, the volatility of major cryptocurrencies set new records. BTC set a new historical high of $1,147. Against the background of general euphoria among crypto investors, the coin did not stay above $1000 for long very soon a bear trend began, during which the BTC fell to $694. The next time the cryptocurrency was able to overcome resistance again at the level of a thousand dollars only in January 2017.

3: The Final Misadventure for Mt. Gox

In February 2014, the Mt.Gox site was hacked again, this time 744 thousand bitcoins were stolen. It is an absolute record and the biggest hack in the trade to date. As a result of the hack, Mt.Gox filed for bankruptcy and closed, creating panic in the bitcoin market. From that time on, the first prolonged fall of Bitcoin began, which is commonly known as the "cryptocurrency winter."

4: The Time When Even Your Grandma Learned About Crypto

The end of 2017 is remembered for euphoria due to the achievement of a new peak in the price of Bitcoin. True, in the same month, the value of the main digital asset began to fall rapidly a week after the formation of the historical maximum on the line of $20.000, BTC dropped to $13.000.

5: The Comedown of 2018

The fall continued into 2018 and marked a new crypto winter. In January, the coin fell to $9,800. The lack of centralized regulation left the question of safety open. In the first nine months of 2018, $927 million worth of cryptocurrencies was stolen from platforms of different countries, according to a CipherTrace report. Also at the beginning of the year, phishing mobile applications of larger exchanges were distributed, which stole customer data. 

Great interest in cryptocurrency and the ICO market has led to the emergence of many scam projects. It all ended with the biggest social networks Facebook, Instagram, Google, Twitter, Snapchat, Baidu, Weibo rolling out a ban on any ICO ad, no doubt a blow across the industry.

So on the 14th of November, BTC cost $6,359, and already on November 25, the rate was $3,729.

6: The Great Expectations (vs Reality)

Another memorable crypto drop took place in late 2019. The main topic in the community was legal issues, the struggle of the US Securities and Exchange Commission (SEC) with bitcoin-ETF, and hopes for the launch of the institutional bitcoin service Bakkt. 

In September, Bakkt finally launched but did not attract much attention among institutional investors, triggering a drop from $10,036 to $6,657 in just a couple of months.

To Sum Up

High inflation in the US stock market and general global economic instability were naturally reflected in a decrease in risk interest among investors. In addition to the situational panic against the background of the fall of UST, the tightening of the monetary policy of the FRS and the end of the "bull" trend in the technology sector, which includes cryptocurrencies the main current reasons for the fall of the market.

The current market crash is not the largest in history, although due to large capitalization, absolute numbers are really large. The price of Bitcoin has been able to increase by several hundred to 60 thousand dollars, so you should not worry about short-term calendar cancellations. 

On the other hand, there are some coins that have less correlation to BTC and it could be a fine new trend. For example, BNB with a well-built all-in-one ecosystem and Launchpad. BNB began to actively master one of the largest markets the American one. As a result, the position of the currency will only strengthen, which makes it extremely promising for investment. 

Clearly, the cryptocurrency will deal with all fluctuations both minor changes during the day and severe monthly collapses.

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