Bitcoin has only been in existence since 2008 but in its short history it has made the headlines several times. There are some weird and wonderful uses for bitcoin and the cryptocurrency has attracted a large amount of press attention, particularly as the currency as highly volatile and there have been several crashes during its history. We’ve taken a look back at some of the best-known bitcoin crashes.
April 2013 Meltdown
The year 2013 was a turbulent time for the cryptocurrency with two separate large-scale crashes. The first collapse saw the price of bitcoin fall from $233 to $67 in just 24 hours. This happened not long after bitcoin had attracted a considerable amount of press attention, which was attracting the interest of the general public. This media coverage had caused the price of bitcoin to increase to over $200 for the first time. However, it was short-lived as the crash brought the price plummeting. Some said this was a way of correcting the rapidly accelerating price, while others linked the crash to problems with Mt.Gox, which, at the time, was the world’s largest bitcoin exchange for selling and buying the currency.
November 2013 Bitcoin Bubble Burst
Later in the year, after a period of consistency where bitcoin’s value stayed at around $130, the price increased dramatically. In late November, Bitcoin was valued at around $1,150 which was a record high. The price tumbled dramatically soon after, dropping below $500 once again. The price rocketed because amateur investors started to take an interest in the cryptocurrency. Regulators had started to show bitcoin in a positive light for the first time, instead of associating it with criminal activity, which only helped to fuel interest in the coin. A number of new exchanges, like the U.S-based Coinbase, made it easier than ever before for anybody to buy and sell bitcoin online. Eventually, this bubble burst and it took years before bitcoin was able to recover from this crash and reach the $1,000 marker once again.
February 2014 Mt. Gox Crash
One of the most memorable bitcoin crashes was the complete collapse of Mt. Gox. The price of bitcoin had steadily been increasing since the bubble burst in 2013. However, it further declined in February 2014 when the currency fell once more from $867 to $439, a drop of almost 50%! After this, the value of bitcoin stayed low until about 2016. This crash was caused by the exchange, Mt. Gox, becoming the victim of a hack. The exchange had to stop withdrawals and they later revealed that over 850,000 bitcoins had been stolen by cybercriminals. That amount would now be worth around $3.5 million. This incident caused widespread concern about the security of bitcoin and it also undercut the liquidity in the currency. The value of bitcoin was likely harmed for years following this major crash, particularly as any public trust in the currency had been damaged considerably. People were now put off of using bitcoin exchanges and investing in the currency.
July 2017 Summer Sellout
Skip ahead a few years to 2017, in this time bitcoin has had the time to recover and its value has soared to new highs. In early 2017, bitcoin’s value reached above $1,000 for the first time in years and continued to climb. A few months later, by June the cryptocurrencies value had reached around $3,000. Despite this, the currency is still as volatile as ever and dropped sharply back down to around $1,869. The crash was caused by rumours and debates about the creation of a new cryptocurrency. Developers were expressing concern about the technology behind bitcoin, claiming that it was slow in comparison to other cryptocurrencies, like Ethereum and Litecoin, but couldn’t decide how to upgrade the technology. It became clear that a “fork” in the blockchain would be required. This caused market uncertainty and a drop in price as a precautionary measure. Eventually, the creation of a new cryptocurrency Bitcoin Cash was implemented in August 2017 but, ironically, it had little impact on the value of bitcoin.
September 2017 China’s Regulation
There’s been more bad news for bitcoin. The most recent price crash was at the beginning of September this year. Although bitcoin’s price had continued to rise after it had recovered from the uncertainty of bitcoin cash, it later fell by 37% following China’s announcement that it would be banning Initial Coin Offerings (ICOs). This announcement caused widespread concern that the country, which is home to some of the largest bitcoin mining pools and exchanges in the world, would ban the currency completely to ensure financial and economic stability.
In the future, it’s not known whether bitcoin’s value will continue to soar or whether another crash will end the currency as we know it.
