Since Bitcoin’s inception in 2009 the market has never been forgiving. Bitcoin’s price exhibited major crashes and price swings which cased massive losses to many traders. Its time to take a look at some of the hardest hitting market crashes in Bitcoin’s history.
Welcome to themerkle.com and today we are counting down the top 5 bitcoin crashes.
#5 The crash of the Great Bubble of 2011
On June 8th 2011, after a 2 month rally from a price of $1 Bitcoin’s price peaked at $32, setting a new all time high. This was the first time Bitcoin’s price experienced such a sudden price hike that people anticipated prices of up to $1000. Unfortunately, a prolonged bear market ensued shortly after the peak. As mainstream media turned against Bitcoin it’s price bottomed out at 2 dollars 6 months later. After the 94% price decline Wired even wrote an article titled the Rise and Fall of Bitcoin, this set the stage for those outside the Bitcoin community to see Bitcoin as a failed experiment.
#4 Summer Crash of 2012
Fast forward a year and Bitcoin’s price has fully recovered from the $2 bottom in November of 2011. The year closed at $4.50 and prices kept rising, come August 2012 and Bitcoin’s price peaked at $15.25. It seemed that Bitcoin was finally taking off again and was getting ready for it’s next bubble when the price fell to $10 in a matter of minutes, followed by further decline bringing the price to a low of $7.50.
One factor which might have attributed to the sharp decline was the shutting down of a major Ponzi Scheme operation in August of 2012. The owner of the operation titled Bitcoin Savings and Trust, left with around US $5.6 million in bitcoin-based debts, which left many investors empty handed. After an investigation conducted by the US Securities and Exchange Commission, Trendon Shavers, a Texas man using the alias pirate at 40 was arrested in 2014 on the first federal securities fraud charges involving a bitcoin related scheme.
#3 Bitcoin Fork of March 2013
On March 12th 2013, Bitcoin’s protocol split experiencing what is called a fork, ultimately resulting in two sets of transaction logs being kept. This permitted the spending of the same funds twice, effectively breaking the cryptocurrency. As expected, the market did not react well to the bug. As traders panicked and sold off their coins, the price of bitcoin tanked 23% from a high of $48 to a low of $37.
Fortunately, the fork was quickly resolved when miners worked out a fix by reverting to an older version of Bitcoin. As a result, users’ funds at major exchanges like MtGox were unaffected and prices returned to previous levels shortly after.
#2 Bubble Burst of April 2013
As prices continued to climb after the fork, Bitcoin started appearing more and more in the mainstream media. What followed was a major bull market lasting approximately 2 months. When prices peaked at $266 on April 10th, 2013 MtGox – the most popular exchange at the time – saw an all time high trading volume of approximately $30 million. Since the exchange never experienced such high trading activity it’s servers couldn’t keep up causing a major lag in trading. It took over 70 minutes between a user making an order on the exchange and the order actually going through which undeniably attributed to the horrific crash that followed.
In a matter of hours the price crashed from $266 to a low of $54. MtGox played a major role in the crash as the exchange went down for over 8 hours shortly after the crash to “update it’s servers”, leaving the Bitcoin community in a state of shock.
#1 MtGox’s Fall
The greatest crash of all time is no other than MtGox’s fall. After serving the Bitcoin community for multiple years, acquiring trust and support from traders, the exchange started halting withdrawals. What followed was a major selloff (.) as MtGox traders tried to sell their coins and withdraw their funds, Bitcoin’s price crashed from an all time high of $1163 to a low of $387. Many argue that if it wasn’t for MtGox’s fall, Bitcoin could be trading at the $10,000 levels, however some say that the bubble had to burst at some point and MtGox’s fall was coincidental.
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