Crypto Winter Chronicles, Or Brief History Of Cryptocurrency Crises
The current bearish trend in the cryptocurrency market has reigned for more than a year, starting from January 2018. This period is called crypto winter. The term is not new, it appeared in 2014, when the first serious crisis in the history of the cryptocurrency hit the market. According to the enthusiasts of the sphere, now that the crypto winter is heading to its end, it's time to talk about how it differs from all periods of decline we have witnessed before.
But first let's remind ourselves how the price of the main cryptocurrency has changed. The first transaction in the Bitcoin network was completed in early 2009, and the cost of BTC increased very slowly over the next few years. It took the first cryptocurrency more than a year to reach $1, and then two years more to get to $100 per coin. Anyway, now both of these amounts seem ridiculous.
The cryptocurrency began to attract the attention of a wide range of users only in the spring of 2013. Until then, mostly enthusiasts of the sphere knew about Bitcoin. But after the coin managed to exceed the $100 mark, its popularity noticeably started increasing. Bitcoin experienced another explosive peak of value by the end of 2013, when its price soared by 850% and exceeded $1100 just for two months. However, the fall from such a significant level can be considered as the starting point of the large-scaled crypto winter. Yet, this was not the first crisis of the cryptocurrency market.
History of Cryptocurrency Bear Trends
A bear market is at least a two-month downtrend with a price drop of 20% or more. According to the research provided by the Mosaic platform, there were three such periods in the history of the main cryptocurrency before the latest crypto winter.
January 11 — July 11, 2012
This downtrend lasted six months. Bitcoin lost 40% of the price back then, though its maximum price in that period was $7.08. The fall was due to the hacking of several crypto platforms. TradeHill, one of the largest bitcoin exchanges in those days, was closed, and the wallets of the speculative trading platform Bitcoinica and the VPS provider Linode were hacked. Frauders stole over 60,000 BTC from users' accounts.
August 7 — December 6, 2012
The second bearish trend appeared shortly after the first one and was its consequence. Some market participants were disappointed in bitcoin. Besides, there was another hacker attack on the Bitfloor crypto exchange in September, which resulted in a significant price drop. In just 111 days, bitcoin lost 37% of its value.
November 29, 2013 — January 7, 2015. First Crypto Winter
This period lasted more than 400 days and until recently was considered the longest negative trend in the history of the cryptocurrency market. The closure of the Silk Road darknet triggered such a long-term decline. Bitcoin lost 83% of its maximum price of $1149, and opinions about the future of the first cryptocurrency were very different. We already know what happened after the crisis of 2014-2015, but no one knows what will happen next. After all, nobody's ever seen such a disappointment in crypto money as in 2018.
Interestingly, there is a section named “Bitcoin Obituaries” on the popular cryptocurrency portal 99bitcoins. It contains quotes, the authors of which predict the imminent total collapse of the cryptocurrency sphere — often after events that negatively affect the market. By the spring of 2019, the number of such “obits” almost reached 350 — it's more than enough for a book! This means, that every time when bitcoin price starts falling, there are sceptics who declare that:
A. bitcoin is dead,
B. bitcoin is not a currency,
C. cryptocurrency is a bubble that has finally burst.
However, we can see that all these statements are just opinions that never came true. In reality, the crypto sphere is constantly evolving, even in the midst of the crypto winter. In the next article, we'll talk about the longest bearish trend in the history of the cryptocurrency market and consider what crypto enthusiasts say about its end.