As September arrives, the Crypto Assets market often faces a period of turbulence. Historical data from bitsCrunch shows that this month typically sees a decline in market trends and heightened Fluctuation, regarded by many investors as a time to be cautious. However, seasonal adjustments are just a glimpse of the extreme volatility in this market—what truly sends chills down the spine are the market crashes that have occurred in the past and may happen again.
Data source: bitsCrunch.com
By analyzing over 14 years of market data, crash patterns, and trading behaviors, we can glimpse the history of the Crypto Assets market crash from the numbers.
The evolution of the collapse of Crypto Assets
The collapse of crypto assets is by no means a random event, but rather a necessary path for the maturation of the encryption ecosystem. Data from bitsCrunch shows that the early market experienced "devastating collapses" with declines of up to 99%, and has now gradually transitioned to "relatively moderate adjustments" of 50%-80%.
Bitcoin's unforgettable fluctuations
2011 "End of the World Crash" (Fluctuation 99%)
The first major crash of Bitcoin was nothing short of "devastating". In June 2011, the price of Bitcoin reached $32 — which at the time seemed like an astronomical figure — only to plummet by 99%, leaving just $2. The world's largest Bitcoin exchange at the time, Mt. Gox, suffered a security breach, which directly led to Bitcoin prices briefly falling to 1 cent (although this price was largely the result of manipulation). Even so, the "psychological trauma" caused by that crash was real, and it took Bitcoin several years to regain market confidence.
2017-2018 Bubble Burst (Drop 84%)
This is the most "iconic" crash of all Crypto Assets: in December 2017, the price of Bitcoin surged to a high of $20,000, but by December 2018, it had plummeted to about $3,200. At that time, the ICO (Initial Coin Offering) bubble drove all asset prices to absurd highs, but the "market gravity" ultimately arrived as expected.
The "cruelty" of this crash lies in its duration - unlike the early market's pattern of "sharp decline and quick stop," this crash is more like a "slow-motion train wreck," lasting for over a year, and even many of the most steadfast HODLers have lost their patience.
Black Thursday of COVID-19 in 2020 (50% drop)
From March 12 to 13, 2020, it was destined to be recorded in the history of Crypto Assets — during these two days, all asset prices synchronously "went out of control". Bitcoin fell from about 8000 dollars to 4000 dollars in less than 48 hours. What was unique about this crash was that it "plummeted synchronously" with the traditional market, but afterward, Crypto Assets surged all the way up.
2021-2022 "Crypto Assets Winter" (decline of 77%)
From Bitcoin's peak of nearly $69,000 in November 2021 to a low of about $15,500 in November 2022, this crash was not driven by exchange hacks or regulatory panic, but rather by a sell-off triggered by macroeconomic forces and institutional investor behavior. At that time, "institutional players" had officially entered the market, fundamentally altering the logic of the market's decline.
Ethereum's "Darkest Hour"
2016 DAO Hack Event (Fluctuation 45%)
On June 18, 2016, the newly established decentralized investment fund "DAO" suffered a hacker attack, resulting in a loss of 50 million dollars, and the price of Ethereum plummeted by over 45%. However, the sheer dollar loss does not fully reflect the event's entirety: in May 2016, the DAO raised 150 million dollars worth of Ethereum through crowdfunding, and during the same period, the price of Ethereum also reached a peak of about 20 dollars.
ICO and NFT Bubbles and Bursts
Ethereum has become the "core pillar" of the ICO boom—at the beginning of 2017, its price was less than $10, but by January 2018 it had soared to over $1400. However, when the ICO bubble burst, Ethereum was hit even harder than Bitcoin. By the end of 2021, Ethereum's price slowly declined after the NFT boom, and this downward trend continued until 2024.
Market Crash Type
Based on the analysis, we categorize the Crypto Assets crash into different categories: "Extinction-level crash" (decline over 80%), such as the crashes in 2011 and 2017-2018; "Major correction" (decline of 50%-80%), such as during the COVID-19 pandemic and the bear market earlier this year; "Regular Fluctuation" (decline of 20%-50%).
The recovery patterns from different types of crashes vary: extreme crashes typically take 3-4 years to fully recover, and often experience a "super rally" of 2.5-5 times after recovery; the recovery cycle for significant adjustments is 18-30 months.
During significant crashes, liquidity does not simply decrease, but rather it almost "vanishes into thin air." During a crash, the bid-ask spread can expand by 5-20 times, and market depth can reduce by 60%-90% at peak pressure; trading volume can soar by 300%-800% in the early stages of panic, and during the "investor capitulation" phase, it can even exceed 1000%. This creates a vicious cycle: falling prices lead to reduced liquidity, reduced liquidity amplifies price fluctuations, and greater price fluctuations further compress liquidity.
Can we foresee a collapse in advance?
bitsCrunch data clearly reveals the behavioral differences among different types of investors during a market crash. For retail investors, the correlation between price drops and panic selling is as high as 87%, as they heavily rely on social media sentiment, and the "buy high, sell low" behavior pattern is exceptionally stable.
The behavior of institutional investors is completely different: 65% of institutions will adopt a "counter-cyclical buying" strategy during a crash. Their risk management capabilities are stronger, but once they choose to sell, it can amplify the extent of the crash. At the same time, institutions are also much more sensitive to macroeconomic factors than retail investors.
Social media sentiment can serve as a "precursor warning signal" for significant crashes, reflecting market risks 2-3 weeks in advance; while the search volume for "Bitcoin crash" on Google is a "lagging indicator," often peaking only when the crash actually occurs. Additionally, when the "Fear and Greed Index" is below 20, the accuracy of predicting major market fluctuations can reach 70%.
One of the most significant changes in the dynamics of the Crypto Assets market is the increasing correlation with traditional markets during times of crisis. The volatility of the Crypto Assets market tends to fluctuate in sync with stock market prices, while showing an inverse fluctuation with gold prices. Specifically, during crises, the correlation coefficient between Bitcoin and the S&P 500 index is 0.65-0.85 (highly positively correlated), with gold it ranges from -0.30 to -0.50 (moderately negatively correlated), and with the VIX (volatility index) it reaches 0.70-0.90 (extremely highly positively correlated).
Therefore, we can identify a series of "early warning indicators": a decline in network activity, the fear and greed index, RSI (Relative Strength Index) divergence (which can provide a 2-4 week advance warning), the widening of credit spreads, and so on.
Conclusion
The collapse of Crypto Assets is not a random event - they have patterns, causality, and an evolutionary trajectory. Although this market remains highly Fluctuation, it is becoming analyzable, predictable, and even controllable to some extent.
Understanding this is not to escape the Fluctuation, but to learn to coexist with it. The crash will come again, but it will become more like a storm rather than a tsunami.
This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.
The carnival has its end: Can we foresee the crash in advance?
As September arrives, the Crypto Assets market often faces a period of turbulence. Historical data from bitsCrunch shows that this month typically sees a decline in market trends and heightened Fluctuation, regarded by many investors as a time to be cautious. However, seasonal adjustments are just a glimpse of the extreme volatility in this market—what truly sends chills down the spine are the market crashes that have occurred in the past and may happen again.
Data source: bitsCrunch.com
By analyzing over 14 years of market data, crash patterns, and trading behaviors, we can glimpse the history of the Crypto Assets market crash from the numbers.
The evolution of the collapse of Crypto Assets
The collapse of crypto assets is by no means a random event, but rather a necessary path for the maturation of the encryption ecosystem. Data from bitsCrunch shows that the early market experienced "devastating collapses" with declines of up to 99%, and has now gradually transitioned to "relatively moderate adjustments" of 50%-80%.
Bitcoin's unforgettable fluctuations
2011 "End of the World Crash" (Fluctuation 99%)
The first major crash of Bitcoin was nothing short of "devastating". In June 2011, the price of Bitcoin reached $32 — which at the time seemed like an astronomical figure — only to plummet by 99%, leaving just $2. The world's largest Bitcoin exchange at the time, Mt. Gox, suffered a security breach, which directly led to Bitcoin prices briefly falling to 1 cent (although this price was largely the result of manipulation). Even so, the "psychological trauma" caused by that crash was real, and it took Bitcoin several years to regain market confidence.
2017-2018 Bubble Burst (Drop 84%)
This is the most "iconic" crash of all Crypto Assets: in December 2017, the price of Bitcoin surged to a high of $20,000, but by December 2018, it had plummeted to about $3,200. At that time, the ICO (Initial Coin Offering) bubble drove all asset prices to absurd highs, but the "market gravity" ultimately arrived as expected.
The "cruelty" of this crash lies in its duration - unlike the early market's pattern of "sharp decline and quick stop," this crash is more like a "slow-motion train wreck," lasting for over a year, and even many of the most steadfast HODLers have lost their patience.
Black Thursday of COVID-19 in 2020 (50% drop)
From March 12 to 13, 2020, it was destined to be recorded in the history of Crypto Assets — during these two days, all asset prices synchronously "went out of control". Bitcoin fell from about 8000 dollars to 4000 dollars in less than 48 hours. What was unique about this crash was that it "plummeted synchronously" with the traditional market, but afterward, Crypto Assets surged all the way up.
2021-2022 "Crypto Assets Winter" (decline of 77%)
From Bitcoin's peak of nearly $69,000 in November 2021 to a low of about $15,500 in November 2022, this crash was not driven by exchange hacks or regulatory panic, but rather by a sell-off triggered by macroeconomic forces and institutional investor behavior. At that time, "institutional players" had officially entered the market, fundamentally altering the logic of the market's decline.
Ethereum's "Darkest Hour"
2016 DAO Hack Event (Fluctuation 45%)
On June 18, 2016, the newly established decentralized investment fund "DAO" suffered a hacker attack, resulting in a loss of 50 million dollars, and the price of Ethereum plummeted by over 45%. However, the sheer dollar loss does not fully reflect the event's entirety: in May 2016, the DAO raised 150 million dollars worth of Ethereum through crowdfunding, and during the same period, the price of Ethereum also reached a peak of about 20 dollars.
ICO and NFT Bubbles and Bursts
Ethereum has become the "core pillar" of the ICO boom—at the beginning of 2017, its price was less than $10, but by January 2018 it had soared to over $1400. However, when the ICO bubble burst, Ethereum was hit even harder than Bitcoin. By the end of 2021, Ethereum's price slowly declined after the NFT boom, and this downward trend continued until 2024.
Market Crash Type
Based on the analysis, we categorize the Crypto Assets crash into different categories: "Extinction-level crash" (decline over 80%), such as the crashes in 2011 and 2017-2018; "Major correction" (decline of 50%-80%), such as during the COVID-19 pandemic and the bear market earlier this year; "Regular Fluctuation" (decline of 20%-50%).
The recovery patterns from different types of crashes vary: extreme crashes typically take 3-4 years to fully recover, and often experience a "super rally" of 2.5-5 times after recovery; the recovery cycle for significant adjustments is 18-30 months.
During significant crashes, liquidity does not simply decrease, but rather it almost "vanishes into thin air." During a crash, the bid-ask spread can expand by 5-20 times, and market depth can reduce by 60%-90% at peak pressure; trading volume can soar by 300%-800% in the early stages of panic, and during the "investor capitulation" phase, it can even exceed 1000%. This creates a vicious cycle: falling prices lead to reduced liquidity, reduced liquidity amplifies price fluctuations, and greater price fluctuations further compress liquidity.
Can we foresee a collapse in advance?
bitsCrunch data clearly reveals the behavioral differences among different types of investors during a market crash. For retail investors, the correlation between price drops and panic selling is as high as 87%, as they heavily rely on social media sentiment, and the "buy high, sell low" behavior pattern is exceptionally stable.
The behavior of institutional investors is completely different: 65% of institutions will adopt a "counter-cyclical buying" strategy during a crash. Their risk management capabilities are stronger, but once they choose to sell, it can amplify the extent of the crash. At the same time, institutions are also much more sensitive to macroeconomic factors than retail investors.
Social media sentiment can serve as a "precursor warning signal" for significant crashes, reflecting market risks 2-3 weeks in advance; while the search volume for "Bitcoin crash" on Google is a "lagging indicator," often peaking only when the crash actually occurs. Additionally, when the "Fear and Greed Index" is below 20, the accuracy of predicting major market fluctuations can reach 70%.
One of the most significant changes in the dynamics of the Crypto Assets market is the increasing correlation with traditional markets during times of crisis. The volatility of the Crypto Assets market tends to fluctuate in sync with stock market prices, while showing an inverse fluctuation with gold prices. Specifically, during crises, the correlation coefficient between Bitcoin and the S&P 500 index is 0.65-0.85 (highly positively correlated), with gold it ranges from -0.30 to -0.50 (moderately negatively correlated), and with the VIX (volatility index) it reaches 0.70-0.90 (extremely highly positively correlated).
Therefore, we can identify a series of "early warning indicators": a decline in network activity, the fear and greed index, RSI (Relative Strength Index) divergence (which can provide a 2-4 week advance warning), the widening of credit spreads, and so on.
Conclusion
The collapse of Crypto Assets is not a random event - they have patterns, causality, and an evolutionary trajectory. Although this market remains highly Fluctuation, it is becoming analyzable, predictable, and even controllable to some extent.
Understanding this is not to escape the Fluctuation, but to learn to coexist with it. The crash will come again, but it will become more like a storm rather than a tsunami.