What are the biggest price drops in crypto history?

The cryptocurrency market is known for its volatility, and this has led to several notable price drops throughout its relatively short history. Regulatory actions, market speculation, hacks, or significant global economic events have all contributed to some of these crashes. Here, we’ll explore some of the biggest price drops in crypto history, highlighting the causes and impacts of each event.

1. Bitcoin's 2011 Crash: Mt. Gox Hack

In 2011, Bitcoin experienced its first major crash after Mt. Gox, one of the largest cryptocurrency exchanges at the time, was hacked. Bitcoin’s price fell from around $32 in June to nearly $2 by November, an approximate 94% drop. This event was significant as it was the first time that Bitcoin’s security and stability were seriously questioned, leading to skepticism about cryptocurrencies as a whole.

2. The 2013 China Ban

In December 2013, the People’s Bank of China banned financial institutions from using Bitcoin, which triggered a significant sell-off. Bitcoin's price plummeted from an all-time high of $1,150 to around $500 in a matter of weeks—a drop of over 50%. This crash showed how regulatory decisions could have a massive impact on the nascent cryptocurrency market.

3. The 2017-2018 Crypto Winter

Due to the ICO (Initial Coin Offering) craze and growing public awareness, Bitcoin reached an all-time high of nearly $20,000 in December of 2017. However, by early 2018, the bubble had burst, and Bitcoin fell to around $6,000 by February. By December 2018, Bitcoin was trading below $3,500, representing an 84% decline from its peak. Many altcoins suffered even greater losses, with some dropping over 90% in value. This period became known as the “Crypto Winter,” as the entire market experienced a prolonged downturn.

4. COVID-19 Crash: March 2020

Cryptocurrency prices experienced a sharp decline as a result of the panic that the COVID-19 pandemic caused on the global financial markets in March 2020. Bitcoin’s price fell from around $9,000 to below $5,000 within a matter of days, marking a 50% drop. Other cryptocurrencies experienced similar losses, with Ethereum dropping from $200 to below $100. The crash was part of a broader market sell-off as investors sought liquidity amid uncertainty. Despite the significant decline, there was a quick recovery after this crash, which prepared the market for the bull run in 2020–2021.

5. May 2021 Crash: China Crackdown and Elon Musk

Multiple events led to a significant correction in the cryptocurrency market in May 2021. China reiterated its crackdown on cryptocurrency mining and trading, and Elon Musk announced that Tesla would no longer accept Bitcoin as payment due to environmental concerns. Bitcoin’s price fell from around $60,000 in April to below $30,000 by June, a drop of over 50%. Ethereum also fell from above $4,000 to around $1,800 during the same period. This crash highlighted the market’s sensitivity to regulatory news and influential figures like Elon Musk.

6. Terra Luna and Celsius Collapse: 2022

The collapse of the TerraUSD (UST) stablecoin and its sister token Luna in 2022 led to one of the biggest and most dramatic crypto crashes. UST, an algorithmic stablecoin, lost its peg to the U.S. dollar, which caused Luna to become worthless in a matter of days. Luna’s price dropped from over $80 in early May to less than $0.01 by mid-May 2022, effectively wiping out billions in value. Shortly after, Celsius, a prominent crypto lending platform, froze withdrawals, leading to further panic and a broader market crash. Bitcoin fell from $40,000 in early 2022 to below $20,000 by June, marking a roughly 50% drop.

7. FTX Collapse: November 2022

In November 2022, the collapse of FTX, one of the largest cryptocurrency exchanges, sent shockwaves through the market. FTX’s bankruptcy filing, coupled with revelations of mismanaged funds, led to a massive sell-off. Bitcoin’s price dropped from around $21,000 to $16,000, while many altcoins experienced similar or even greater declines. This event underscored the risks of centralized exchanges and lack of regulation in the crypto space.

Final Thoughts

Cryptocurrency price declines are a normal part of the market's evolution and frequently result from hacks, legislative changes, macroeconomic factors, or internal project problems. Each major crash has contributed to the maturation of the crypto ecosystem, leading to increased regulation, better security practices, and improved investor education. Understanding the biggest crashes in crypto history helps highlight the risks involved and underscores the importance of conducting thorough research before investing.