Bitcoin did not reach an all time high of $5000 without some hiccups on the way. As seasoned Bitcoin investors would tell you, it has been a wild ride all along. These crashes show the volatile nature of the cryptocurrency and there is a lot that can be learned from them.
April 2013’s Crash
In April 2013, Bitcoin price dipped a massive 71% in less than 12 hours. The prices went from $233 to $67 overnight. It took seven month for Bitcoin to recover.
At this time Bitcoin had just started to go mainstream. Up until 2013, Bitcoin was priced below $15. This was the first time that the cryptocurrency was hit by media coverage, which helped above $200. Part of the reason could have also been outage at Mt. Gox at the same time.
2013 Bubble Burst
This crash will always be memorable for me, because it was then when I was first introduced to Bitcoin. 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 prices tumbled down to less than half of that. It took Bitcoin four years to again reach $1000 mark. The late 2013 crash had all the signs of bubble, as amateur investors (like me) rushed to buy the digital currency. During this time, Coinbase ahd also started making buying Bitcoin extremely simple for an average Joe.
The Mt. Gox Crash
Bitcoin was steadily growing through January and February when it suddenly fell nearly 50 percent from $867 to $439 – because of Mt. Gox, largest exchange of that time, supposedly got hacked and was shut down.
The exchange soon halted withdrawals and later revealed that thieves stole 850,000 Bitcoins (which would be worth $3.5 billion today).
Summer of 2017 Crash
After hitting $1000 in the beginning of this year 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.
This crash was largely attributed to the Aug 1 hard fork which eventually gave birth to a another version of Bitcoin called Bitcoin Cash.
China’s Intervention Crash
Soon after the fork Bitcoin started to roar to new high and reached a new all time high of $5000 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.
China was responsible for this crash. The country banned the ICOs, and then went after Bitcoin exchanges. The process lead to sudden decline in daily trading volumes from China, but the price managed to shoot back up once again to $4000.
Lessons to be Learned
If there is one lesson to take away looking at the history of Bitcoin, is that Bitcoin is super volatile and its value is increasing year-on-year. So if you’re planning to invest in Bitcoin or any crypto for that matter, think long term (2-3 years). Bitcoin always bounces back no matter what.