Five Bitcoin Crashes (And What You Can Learn From Them)

Tyler Durden's picture

Authored by Darryn Pollock via CoinTelegraph.com,

With Bitcoin price reaching a new high of $5,000 recently, and then dumping back down to nearly $3,000, it’s been a wild ride this month.

These crashes are part and parcel of the volatile digital currency, and drops of 10, 20, even 40 percent are not that uncommon.

Since Bitcoin began, there have been some major crashes, but there have also been some good lessons to learn.

April 2013’s meltdown

In one of the earlier and larger drops, Bitcoin price went from $233 to $67 overnight, a massive 71 percent drop in 12 hours. It would take seven months to recover.

This meltdown was attributed to Bitcoin rubbing shoulders with the mainstream for the first time. The digital currency had never crossed $15 before 2013 but a flood of media coverage helped drive it well above $200.

This was a drastic and violent correction that followed the exuberant price rise, although, there was also an outage at Mt. Gox which was said to be a catalyzing factor.

The famed 2013 bubble

After April, Bitcoin price hovered around $120 until later in the year when prices suddenly skyrocketed to a high of $1,150 in late November. However, by mid-December, the price had tumbled back down to less than half of that, and that’s where it would stay for four years before crossing $1,000 again.

The late 2013 crash had all the signs of a bubble, as amateur investors rushed the digital currency. It was further perpetuated as regulators took a positive stance on it, while exchanges such as Coinbase had started making the buying process far easier.

The Mt. Gox misfortune

Adding to the long road to recovery after the collapse in December 2013 was the Mt. Gox calamity that nearly sunk the whole Bitcoin boat. Bitcoin was steadily growing through January and February when it suddenly fell nearly 50 percent from $867 to $439.

This collapse was triggered when Mt. Gox announced that it had had a major hack. On Feb. 7, the exchange halted withdrawals, and later revealed thieves had made off with 850,000 Bitcoins (which would be worth around $3.5 bln today).

The summer sale of 2017

In early January of this year, Bitcoin price once again crossed the $1,000 mark which set off a massive price spike as through June the digital currency was topping $3,000. However by Mid-July it had fallen back 36 percent to $1,869.

Despite the boom and increased interest, there were still concerns about the code and a civil war was brewing. The Aug. 1 hardfork was looming large and scaring many investors as to the future of the coin, since users and miners sought different solutions.

Ironically, such a fork did materialize in August in the form of rival Bitcoin Cash — but this seems to have done no long term harm to Bitcoin.

China’s stern intervention

With the fork out of the way and peace restored between different parties, Bitcoin once again tore off on a huge growth spurt. It climbed close to $5,000 at the start of September before plunging 37 percent by Sep. 15, shaving off over $30 bln from Bitcoin's total market cap in the process.

This drop has been put down to one thing really, and that’s China. The socialist country first loudly cracked down on ICOs, and then went after digital currency exchanges, making its feelings on the disruptive monetary system known.

Lessons to be learned

While it is not a lesson, more a way of life with Bitcoin, it must be plainly known that the digital currency is volatile.

What’s just as apparent is that Bitcoin crashes seem to coincide with speculative run-ups coupled with exogenous shocks, such as a major hack or a government crackdown.

However, it has been seen that Bitcoin always bounces back. The bouncing back process can be anywhere from a week to a couple years, and the cautionary tale there is long term holding bypasses any stress caused by massive drops.

The crashes of late have been far smaller, less susceptible, and the bounce backs have been quicker and more resilient. This is indicative of a maturing market. Today, the cryptocurrency market is so much bigger and has proven to be resilient.

 

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FreeShitter's picture

How many bitcoin articles do we really need a day? 

EHM's picture

Each Bitcoin article forks into another article. Also there are many other Bitcoin articles vying for your attention.

NugginFuts's picture

How does Bitcoin (or any digital currency) handle a prolonged recession? Anybody know?

Bunga Bunga's picture

Just look at Venezuela. People are using Bitcoin in order to survive.

Mementoil's picture

Listen everyone.
I don't consider myself an expert in technical analysis, but I'm seeing a massive head and shoulders top nearing completion, and this means that BTC is about to sell off HARD.
To escape that fate, BTC must set an all time high above 5000$ rather quickly.

Be warned...

FreeShitter's picture

I agree and I said that last week, that 3k will be heavily tested soon. Hedge accordingly. Dash has been above water and is a great one.

Kotzbomber747's picture

How many bitcoin articles do we really need a day?"

With Gold and Silver in an almost permanent dolldrum, ZH desperately needs a succes story. They need something that goes up and that they can be right about, something about which they can say "we told you so."

Mementoil's picture

Gold and silver may seem to be in a "permanent dolldrum" compared to BTC mania.
But right now gold is up 12% YTD and closed up almost 10% on 2016, so as far as I'm concerned that's a nice, steady bull market right there.

 

DWD-MOVIE's picture

I'm making over $14k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do...  http://disq.us/url?url=http%3A%2F%2Fwww.Jobzon3.com%3Ab8eR_DQLwGRPVGtFvv...

OpenThePodBayDoorHAL's picture

When someone asks me about Bitcoin, I ask Which One?

Come November we'll have another one from Seg2Wit, the Chinese miners say the chances are 100%. That will make 3 Bitcoins plus >600 Bitcoin clones.

"But oh oh cryptocoins are SCARCE!"

Ethereum: Which One?

LOL

Creepy_Azz_Crackaah's picture

Why not put out a ZHCoin? The code is open source so duplicate away! (As we've been seeing, and you point out, OpenThePodBayDoorHAL.)

ZH can REALLY pump ZHcoin with an article 15 minutes for ZHers to comment on. Get everyone on board...

buy, Buy, BUY!!!!!

IH8OBAMA's picture

The real question is, "How many Bitcoins can you get in a Venezuelan wheelbarrow?"

Golden Phoenix's picture

<People who get free airdrop coins to dump for free cash are just stupid.

LOL

 

Slomotrainwreck's picture

It looks like DASH and BTC both had the same 12 or so percent down.

ParkAveFlasher's picture

Those pullbacks are awesome if I go back in time and figure out how to buy on the dips, knowing them to be absolutely temporary in the future.

Kotzbomber747's picture

Remember: "this time it's different."

kochevnik's picture

Yes the pattern is there and it will lead to lower price.  But H/S often occurs along a trendline, not on horizontal line.  So right shoulder may drop to higher nadir than left shoulder.  I have not analyzed in depth

Mementoil's picture

The neckline of this H&S pattern is descending, not ascending.

Veritas X-'s picture

HERE is one You'all most defintely DO wanna read.

>>>

newsandviews49 in cryptocurrency

**You can't make this shit up. It's literally Lucifer-coin. A coin with the Sigil of Lucifer as a logo and the name Morningstar (another name for Lucifer)**

 "So here's the logo of "Morningstar" coin with almost every f'n Luciferic symbol known to man mixed in. Clearly they realized though that Lucifer-coin could be thought badly of so they decided to opt for "a better marketing name" with "Morningstar." You really can't make this shit up it's so ridiculous.

Don't believe me? Let's have a look at some key points about the name and the logo...."

https://steemit.com/cryptocurrency/@newsandviews/you-can-t-make-this-shi...

 

X-

CH1's picture

It's from the Debbil!

Sad.

SILVERGEDDON's picture

Nah - it's from tmosley. 

c2nnib2l's picture

I imagine new admin got some bitcoins in his wallet. Couple of months ago ZH was laughing at Bitcoin now it praise it and crying over the drop so yeaaah 

Winston Churchill's picture

Who cares ?

BTC is not the cure to a symptom of what ails us,its like leeching a cancer patient.

It keeps the peasants amused and docile.

While govt. retains its monopoly on violence, its no solution to anything,as its

proponents will find out.

Power grows from the barrel of a gun.

11b40's picture

How many paesants do you know?  How many are buying cryptos?  The average peasant doesn't even know what BTC is, and a whole lot of folks on this board don't really understand it, either.

CH1's picture

Actually, I know some former peasants who came out of it with Bitcoin.

One of the few times the right people got rich.

GoinFawr's picture

RE: "peasants"

Anarcho Syndicalist: Oh! What a giveaway!

Peasant woman: There you go, bringing 'class' into it again.
Anarcho Syndicalist: Well that's what it's all about! If only people would listen...

FWIW:  BTC's chart is a fucking natural; for better or worse

 

Golden Phoenix's picture

Government is wielding such violence upon the people of Venezuela. Since local stores are empty they're using bitcoin to buy food and supplies on Amazon. Bitcoin is keeping the peasants alive.

If you truly believe power grows from the barrel of a gun, shoot yourself and become a god.

therover's picture

The same as the number of crypto currencies currently (damn...alliteration at it's best)  in existence....thousands.

11b40's picture

Last I checked, you are not required to read any of them.

HRClinton's picture

I feel the SAME way about the BTC price surges and dips, as do the gold bugs, whose average AU cost is $300 (e.g., a long-time ZH blogger from TX).

I bought my BTC in 201(at $600), so I don't hyperventilate or jizz my pants, every time that the prevaling price has my purchases above or below the waves. All I hear is the whoosh-whoosh of the waves.

My only regret is that I dilly-dallied, when I could've bought much more in 201(at < $100).

quadraspleen's picture

"My only regret is that I dilly-dallied, when I could've bought much more in 201(at < $100)."

same

Bay of Pigs's picture

WTF? You could have bought BTC in 2015 for a little over $200.

SILVERGEDDON's picture

As many articles as can be packed up your ass until you buy in at the top. 

Yellow_Snow's picture

Right, Tyler should post an article how Gold got smashed today...  :(

DownWithYogaPants's picture

How many articles on BTC do we need?

INFINITE NUMBERS mah dear!

Rhetorical's picture

Just wait until you start Seeing Omisego/OMG articles thats when the fun begins.

 

kamikun's picture

>>How many bitcoin articles do we really need a day? 

As many as the market dictates. Enjoy the ride!

lester1's picture

Kim Jong Un uses Bitcoin to hide his wealth from international sanctions. Expect the DOJ/SEC to crack down on Bitcoin soon.

CH1's picture

Kim Jong Un uses Bitcoin to...

And you know this how?

tmosley's picture

Musta pm'd Miss Cleo.

11b40's picture

The magic of virtual reality.

RawPawg's picture

Stack PM's

There,I Fixed It For Y'all

maxblockm's picture

Really?

Silver could maybe do a 10x, but how long would it take? What's the opportunity cost of investing in it vs crypto?

How about Au, you think it's ready for a 10x run? How about 2x?

Bitcoin can do another 2x easy.

tropicthunder's picture

Better have Big Dog Balls if you want to play in the Crypto ring. Having a plan to add into pullbacks as far down as 80%+ should be a given. Our add-on plan had us adding more BTC all the way down to the lows on this last decline so our positioning is looking really solid. Case in point.. Have no fear when big fucking selloffs occur. Just have a plan and execute and you'll come out this thing in a few years a squillionaire...

11b40's picture

Acctually, I would say that you shouldn't buy more than you can afford to lose, which is true in every case, but nothing wrong with some educated risk-taking with a few extra bucks.  

I actually think it is more fun than Vegas, and easier to cash out ahead....but I'm an old fart now & Vegas ain't what it used to be to me.

SRV's picture

Deep State keeping retail money out of gold for now...

tropicthunder's picture

That should NOT be a shocker.. Gold selling off.. nigga pleaze.. I expect Gold to get fucking destroyed from here on out until December.. Gold is just a fart in the wind compared to Crypto now.