The world of cryptocurrency is no stranger to bear and bull markets. As a refresher, bear and bull markets are used to respectively describe prolonged periods of falling prices or rising prices. Within crypto, these markets are generally synchronous with the direction of your portfolio, so understanding these markets and what they look like, can be immensely helpful in making well-informed decisions.
That’s why in this article, we’ll be diving back through history; taking a tour through some of the most notable bull and bear markets within crypto.
Timeline of Crypto Bear Markets
Cryptocurrencies are notorious for their extreme value swings, and in their short history, they’ve experienced their fair share of bear markets and crypto winters. When it comes to traditional markets, investors would typically expect about 14 or so bear markets (20-30% drops in value), over a 50-year investment time span. And then we have Bitcoin, which has been declared dead more than 450 times in just 12 years. With that being said, let’s take a look at some of the nastiest crypto bear markets in history!
2011: The First Bear Market
Jun 2011 to Nov 2011 | Peak: $42.67 AUD | Low: $2.91 | Decline: -93.18%
The first major bear market in crypto occurred long before most of us even knew what a Bitcoin was. The start of 2011 was indisputably stellar for BTC, with the fledgeling crypto enjoying a meteoric start to the year – reaching an all-time high of $42.67 by June 8th.
Unfortunately, this didn’t last. On June 19th, Mt. Gox was compromised by a hacker, who managed to steal over 850,000 Bitcoins, including 750,000 that were owned by Mt. Gox clientele. This incident sent the price of Bitcoin tumbling, and by November 18th, BTC had lost 94% of its value, bear-ly holding on at around $2.91.
This was arguably one of the harshest bear markets, not just because of the steep drop, but also the questions it brought up regarding the trustworthiness of crypto. At the time, Bitcoin was still in its infancy, and Mt. Gox was an exchange that was handling more than 70% of all BTC transactions at the time. It being compromised was two steps back in the goal of broader cryptocurrency adoption.
2013: Troubles on Mt. Gox and Silk Road
Dec 2013 to Aug 2015 | Peak: $1,653.81 AUD | Low: $255.56 AUD | Decline: -84.54%
Following the Mt. Gox hack that resulted in half-a-billion worth of BTC being stolen, Bitcoin experienced another series of events that would again, abruptly end an otherwise stellar rise. This bear market would last not one, but two years, resulting in Bitcoin losing about 84% of its value. So what exactly happened?
In October 2013, Silk Road, an online black market that represented one of the first forms of widespread user adoption for crypto, was taken down by the FBI. Silk Road’s closure wasn’t an immediate catalyst but was compounded by the collapse of the Mt. Gox exchange soon after. In addition, hackers targeting companies in the space like PicoStocks (5,896 BTC stolen), Flexcoin (896 BTC stolen), Cryptspy (13,000 BTC & 300,000 LTC stolen), and more, became increasingly rampant throughout 2014. These issues culminated in a 630-day long bear market in which the price of Bitcoin fell from $1,653.81 to $255.56, and then traded sideways for a further seven months.
The shutdown of Silk Road and Mt. Gox impacted not just Bitcoin, but the broader crypto space in general, causing many altcoins to fall off the metaphorical mountain. Litecoin (LTC) for example, followed a close trajectory to Bitcoin, falling from a peak of $71.50 AUD in November 2013 to around $1.70 AUD by January 2015, which was then accompanied by minimal growth up until 2017.
2018: The Great Crypto Crash
Dec 2017 to Feb 2019 | Peak: $27,883.86 AUD | Low: $4,633.70 AUD | Decline: -83.38%
One of the most famous bear markets in crypto history came in 2018. Fittingly described as ‘the great crypto crash’, this event sliced 83% off the value of Bitcoin in less than a year. This bear market was also unique in that it was the first mainstream crypto crash. Throughout the preceding bull run, crypto had been receiving increased mainstream coverage and media attention, with more people participating in the market than ever before. Unfortunately, this meant the crash was all the more crushing.
One of the main factors leading up to the crash was the 2017 ICO bubble. While the influx of ICOs was undeniably effective in attracting investors, it was not sustainable long-term given that most of them provided little to no real value. Demand eventually diminished as the ICO bubble popped, leading to the collapse of the crypto market. The bubble also brought about a new wave of exit scams, ICO scams and Ponzi schemes, which certainly didn’t help investor confidence. BitcoinExchangeGuide recorded a total of 53 crypto scams & hacks through 2017-2018, which was more than the previous six years combined. Furthermore, there was significant FUD among users as China’s government announced new laws banning crypto exchanges from servicing users in the country.
The result of these events caused Bitcoin’s price to crash from $27,883 on December 16th 2017, to $4,633 on December 15th 2018, followed by several months of stagnation.
Other cryptocurrencies were not exempt from the bear market either: Litecoin (LTC) and Ethereum (ETH) lost 86.9% and 92.03% of their value respectively. On the more extreme end, Ripple (XRP) dropped by over 99%, with no meaningful recovery until recently in January 2021.
Timeline of Crypto Bull Markets
For newcomers, it can be fascinating to think that many investors see these bear markets as an opportunity – a bear-gain sale if you will – lending to the popularity of expressions like ‘Buy Low, Sell High’ and ‘Buy The Dip’. And when it comes to selling high, there’s no better time than during a crypto bull market. Let’s take a recap of the most significant ones and see what we can learn from them.
2011 - 2013: From $3 to $300
Nov 2011 to Apr 2013 | Low: $2.93 AUD | Peak: $329 AUD | Increase: +11,128.67%
This particular bull market, which began in late November, wasn’t the first, nor was it the largest bull run that Bitcoin had experienced. It was, however, the first to be driven by strong geopolitical factors.
This was spurred on by the 2011 European Recession, along with the burgeoning financial crisis in Cyprus. During this time, Europeans and Cypriots began looking for an alternative approach to protect their money; one that didn’t involve banks and governments. The adoption of Bitcoin during these circumstances was indicative of a deepening distrust in political and financial institutions. This would signal an important shift for Bitcoins, which to that point, was usually only associated with hackers and shady dealings.
During the first stage of this bull market, Bitcoin grew from $2.93 to $10.26. This was more than triple the starting price and was reached in just two months. The second climb began about four months later, in which Bitcoin went from $7.60 to $19.48, followed by a brief 40% decline. Once this passed, the price of Bitcoin essentially grew uninterrupted, peaking at a staggering $329 by the April of 2013, which was a 11,128% increase from where it began in November 2011.
At this point, Bitcoin was already familiar with five-digit rallies. After all, it did see gains of 48,867% when it went from $0.08 to $42.67 (2010 to June 2011). What made this bull run particularly spectacular was both the fact Bitcoin had surpassed three digits, and that it did so with all the conviction and speed of a charging bull.
2015 - 2017: Bitcoin Enters The Mainstream
Aug 2015 to Dec 2017 | Low: $329 AUD | Peak: $27,666 AUD | Increase: +8309.12%
The resulting aftermath of the Mt Gox. & Silk Road bear market was a mostly uneventful 2015, where BTC hovered between $200 to $300. But things were about to change for the better. Starting in late August, Bitcoin witnessed a strong surge in activity and grew to $670 in December 2017. After a brief consolidation period through early 2016, Bitcoin would continue to see strong gains throughout the rest of the year.
By June 2017, it had tripled to $4,350, and by September, a single Bitcoin was priced at $7,000 – up 2000% from where it started. This was already unprecedented, but there was more to come – 4X more. Over the next three months (and subsequently, the final three of this bull market), Bitcoin rallied by a staggering 295%, setting a crypto all-time high of $27,666.
The bullish market performance was thanks to the unprecedented levels of retail euphoria and mainstream coverage. Crypto investing was no longer limited to tech-savvy speculators or a small minority of traditional stock investors. This fueled the ICO bubble in which people were hopping en masse on the BTC & ETH train to buy the thousands of newly minted altcoins. The consumer appetite for altcoins was so immense that Bitcoin’s market dominance had fallen from 85% to 32% – the lowest it had ever been. And it goes without saying that this was at the height of Bitcoin’s historic performance.
2020 - 2021: A New Digital Age
Sep 2020 to Nov 2021 | Low: $14,346 AUD | Peak: $91,363 AUD | Increase: +536.85%
Of course, we couldn’t have a recap about bull markets without discussing the meteoric ascension of Bitcoin reaching an all-time high of $91,363 last November. This peak had the entire world on the edge of its seat, with many experts proclaiming $100,000 or more by the end of 2021.
Thanks to the COVID pandemic, the digital space had become a booming hub. Naturally, dependence on digital payments fast accelerated, which placed cryptocurrencies directly in the limelight. This was followed by an influx of institutional money. Billions of dollars were poured into crypto throughout 2020 and 2021, from brokerages (Robinhood), corporations (MicroStrategy, Tesla), central banks (JP Morgan Chase, Goldman Sachs), or even entire countries (El Salvador).
The emergence of the multi-billion-dollar NFT market was also important. Not only did it bring mainstream attention to Ethereum, but it effectively started a new era of digital content production and exchange, further advancing the adoption of blockchain technology.
Taking all this into consideration, it’s no surprise, then, that the crypto space grew phenomenally during this bull market. BTC skyrocketed from $14,300 in September 2020, to its peak of $91,363 in November 2021. ETH enjoyed a similar trajectory, going from $702 in September 2020 to an all-time high of $9,386 in November 2021.
The Bottom Line
Looking over bear markets from the past decade certainly isn’t the best way of bolstering newcomer paw-sitivity. Unfortunately, dips and crashes are inevitable for any maturing asset class. At the same time, lucrative periods of growth are just as similarly inevitable, and no asset class shows off this song-and-dance better than crypto.
Getting an idea of what these counterparts look like is just one of the many steps when it comes to successfully navigating the crypto space. Ultimately, these bear and bull markets are at the fundamental and unavoidable core of cryptocurrencies, bringing along new challenges, but also unique opportunities for all participants.
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