Anyone that's spent any amount of time researching or investing in crypto knows one thing about the space: it's volatile. The market has ballooned to new heights, only to crash back down, and then bounce up again months or years later.
June 19, 2011: Mt. Gox Hacked
In an event that rivals the shock felt by many from the LUNA/UST fiasco, perhaps the biggest crash in crypto history was its first. This crash yet again involved the now-infamous Mt. Gox.
Shortly before this flash crash occurred, Bitcoins were being stolen from the exchange and information from Mt. Gox's user database had been leaked. Then, on June 19, 2011, an exploit on the site allowed hackers to drive the price of Bitcoin all the way down from $17.50 to just a penny.
Thankfully, many of the fraudulent trades were able to be reversed, though the incident was a precursor to more turmoil for Mt. Gox in the years ahead.
May 11 - 12, 2022: LUNA/UST
The most recent crash in the crypto markets involving TerraUSD (UST) and Terra (LUNA) still has many investors stunned. While details are still coming in on exactly what started LUNA's now-infamous nosedive and UST's de-pegging from $1.00, fingers are being pointed at Anchor Protocol's annual percentage yield (APY) on UST - an unsustainable 20%.
Naturally, that APY had to be lowered at some point, and when it was, investors jumped ship and began selling their UST. This led to the stablecoin losing its $1.00 peg.
LUNA suffered from the sell-off, too. Part of LUNA's demand was driven by UST, so when it crashed, LUNA crashed along with it.
As of May 19, 2022, LUNA sits at $0.00014, a stunning value given its all-time high was at $116.41 just a little over a month ago on April 3. Meanwhile, UST is currently valued at only $0.08 - again, stunning for a coin that was supposed to stay at $1.00.
December 2017 - February 2018: The Crypto Winter
You know a period in the market is bad when it gets its own equally gloomy name. By this time, Bitcoin wasn't the only crypto on the block, as Ethereum had emerged as a serious alternative and managed to capture 30% of the market by mid-2017.
Initial coin offerings (ICOs) rose in popularity along with ETH. While some investors were able to cash in their ICO rewards for big gains, others were caught up in scams that soured many on putting more money into crypto. The crash affected all crypto, not just Bitcoin.
The sell-off began in December 2017 and wouldn't calm down until February 2018, followed by months of consolidation and another price dip later that year. But the main damage was done between January and February, with Bitcoin losing nearly 65% of its value. ETH lost almost half of its value during the same period.
Some think we may be entering or are already in a new 'crypto winter,' including Vitalik Buterin, a co-founder of Ethereum.
December 2013 - January 2015: China's First Bitcoin Ban and the End of Mt. Gox
The first of China's many bans on Bitcoin and mining was in December 2013. This ban outlawed banks and payment companies from using Bitcoin or exchanging it for renminbi (RMB). The moment proved to be the tip of the iceberg - Bitcoin continued to spiral downward as Mt. Gox's failures as an exchange began to come to light.
On February 7, 2014, Mt. Gox stopped all Bitcoin withdrawals and blamed a bug in Bitcoin for the decision. Three weeks later, the exchange filed for bankruptcy, claiming it had lost a total of 850,000 Bitcoin.
As new evidence emerged of Mt. Gox's mishandling of customer funds, investor enthusiasm waned, and Bitcoin tumbled down the charts after a brief recovery, eventually reaching a low point of $178.10 on January 13, 2015.
April 2013: DDoS Attacks on Mt. Gox
Mt. Gox, one of the most prominent Bitcoin exchanges in the early years of the first cryptocurrency, had grown to handle around 70% of all Bitcoin trades. Such a large point of activity for Bitcoin was bound to experience problems at some stage.
After reaching a high of $260, Mt. Gox was forced to suspend trading to cool down the market. Around that time, the exchange was also getting hammered by DDoS attacks by cyber attackers. The price of Bitcoin dropped all the way down to $55.59 when trading resumed - a fall of over 70%.
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