Looking back at the history of crypto market crashes: What doesn’t kill BTC always makes it stronger

In April 2025, the crypto market was once again in a bloodbath. The Trump administration once again used the tariff stick, and the sentiment of the global financial market changed suddenly. Bitcoin fell by more than 10% in two days, and Ethereum once plunged by 20%, with a liquidation amount of up to $1.6 billion in 24 days. Just like several historic plunges in the past, this scene once again caused collective anxiety: "Is this the end, or the beginning of a new round of collapse?"

But if we look back at the history of the crypto market, we will find that this is not the first time that everyone feels that "this time is over." In fact, every extreme panic is just a unique ripple in this asset curve. From "312" to "519", from the international financial panic in 2020, to the "crypto Lehman moment" caused by the chain reaction of FTX's credit collapse, to this tariff crisis.

The market's script is constantly repeated, but investors' memories are always short.

Based on real data, this article will reconstruct the "market scene" of the previous four historical plunges, compare the decline, sentiment indicators and macro background, and try to extract a regular clue for retrospection and prediction from these extreme moments: When risks come, how does the crypto market bear the pressure? How does it reshape its own narrative again and again in the system shock?

Overview of historical plunges: familiar scripts, different triggers

In the past five years, the crypto market has experienced at least four systemic plunges. Although the backgrounds of each trigger are different, they have all triggered drastic price adjustments and chain reactions on/off the chain.

From the data, "312" is still the worst in history, with BTC and ETH falling by more than 50% on the same day. At that time, the total amount of liquidation in the entire network was as high as 2.93 billion US dollars, more than 100,000 people suffered liquidation, and the largest single liquidation order was worth 58.32 million US dollars. Liquidations of this scale indicate that market participants at the time generally used high leverage (such as 10 times or even higher). When prices fell rapidly, the forced liquidation mechanism was triggered, further exacerbating the selling pressure and forming a vicious cycle.

At the same time, the dramatic operation of BitMEX to "unplug the network" and suspend trading exposed the fragility of market liquidity. At that time, other trading platforms were also in chaos. The cross-platform spread of Bitcoin was as high as $1,000 at one time, and arbitrage robots failed due to trading delays and API overload. This liquidity crisis caused the market depth to shrink rapidly, buy orders almost disappeared, and selling pressure completely dominated the situation.

As the platform with the largest short position at the time, BitMEX's trading suspension actually became a "life-saving straw" for Bitcoin prices not to completely return to zero. If BitMEX had not interrupted trading, its depth exhaustion might have caused the price to drop to near zero in an instant, further triggering a chain collapse of other platforms.

Domino effect under the black swan

"312" is not a phenomenon isolated to the crypto market, but a microcosm of the global financial systemic crisis in early 2020.

Panic collapse of global stock markets

Since the Nasdaq index hit a record high of 9,838 points on February 19, 2020, market sentiment has taken a sharp turn for the worse as the COVID-19 pandemic spreads around the world. In March, the U.S. stock market experienced rare circuit breakers in succession, with the circuit breaker mechanism triggered three times on March 9, 12, and 16. On March 12, the S&P 500 index fell by 9.5%, the largest single-day drop since "Black Monday" in 1987, and the VIX panic index soared to a record high of 75.47. At the same time, the three major European stock indices (Germany, Britain, and France) and the Asia-Pacific market (Nikkei, Hang Seng Index) simultaneously entered a technical bear market, with at least 10 countries' stock indices falling by more than 20%.

The systematic sell-off in the global capital market quickly spread to all risky assets. Cryptocurrencies such as Bitcoin and Ethereum also suffered indiscriminate sell-offs in this context. The market risk appetite plummeted, and the "financialization resonance" of cryptocurrencies and traditional assets was formed.

Bloodbath in the commodity market

The traditional commodity market also collapsed in this crisis. On March 6, 2020, OPEC and Russia failed to reach an agreement on production cuts. Saudi Arabia immediately launched a price war, announced an increase in production and lowered the price of crude oil, triggering a plunge in the global energy market. On March 9, U.S. crude oil (WTI) plummeted 26%, the largest drop since the Gulf War in 1991; on March 18, WTI fell below $20. The uncontrolled plunge in crude oil, the "blood of the global economy", has exacerbated investors' concerns that the global economy is in a deep recession.

In addition, commodities such as gold, copper, and silver also plummeted simultaneously, indicating that "traditional safe-haven assets" were also difficult to hedge against market downturns in the early stages of the crisis, and liquidity panic gradually escalated.

The paradox of the US dollar liquidity crisis and safe-haven assets

With the collective decline in global asset prices, the US dollar liquidity crisis quickly emerged. Investors rushed to sell all kinds of assets in exchange for US dollar cash, pushing the US dollar index (DXY) sharply up from 94.5 to 103.0 in mid-March, setting a three-year high. This "cash is king" phenomenon has caused all risk assets to be sold indiscriminately, and Bitcoin is no exception.

This is a crisis of liquidity contraction, credit deconstruction and emotional trampling. The boundary between traditional and crypto markets has been completely opened at this moment.

Policy Hammer: China's Suppression Storm in May 2021

In May 2021, the crypto market suffered a heavy blow. After hitting a record high of $64,000 in early May, the price of Bitcoin was halved to $30,000 in just three weeks, with the maximum drop of more than 53%. The plunge was not caused by systemic failures on the chain, nor was it directly impacted by the macroeconomic cycle. The main reason was a series of high-pressure regulatory policies successively introduced by the Chinese government.

On May 18, the Financial Stability and Development Committee of the State Council of China clearly stated that it would "crack down on Bitcoin mining and trading activities." The next day, several provinces successively introduced targeted mining rectification measures, including Inner Mongolia, Qinghai, Sichuan and other major computing power cluster areas. A large number of mining farms were forced to shut down, and computing power was quickly withdrawn from the global network, causing the total Bitcoin computing power to drop by nearly 50% in two months.

At the same time, the bank account interface of domestic trading platforms was investigated, and the OTC channel was tightened, causing pressure for capital to flow back. Although mainstream exchanges have gradually withdrawn from the Chinese market since 2017, "high pressure policies" still triggered risk aversion among global investors.

At the on-chain level, the interval between miners' block production increased significantly, and the confirmation time of a single block soared from 10 minutes to more than 20 minutes. Network congestion caused a surge in transfer fees. At the same time, the market sentiment index dropped precipitously, and the crypto panic and greed index entered the "extreme panic" range. Investors' concerns about the continued escalation of policies became the dominant force in the short term.

This round of plunge is the first time that the crypto market has faced the confidence-building process caused by "national suppression". In the long run, the outflow of computing power has unexpectedly promoted the increase in the computing power share in North America, becoming a key turning point in the transformation of the geographical pattern of Bitcoin mining.

Systemic chain collapse: Terra/Luna and DeFi trust crisis

In May 2022, the algorithmic stablecoin UST of the Terra ecosystem was decoupled, triggering a "Lehman moment" in the decentralized financial world. Bitcoin had slowly fallen from $40,000 at the beginning of the year to around $30,000. As the UST mechanism failed, the price of Luna returned to zero within a few days, the DeFi ecosystem quickly became unbalanced, and the price of BTC further plummeted to $17,000. The entire adjustment period lasted until July, with the maximum decline of 58%.

UST was originally the algorithmic stablecoin with the largest market value in the crypto world, and its stability mechanism relied on Luna as a coin collateral asset. When the market began to question the stability of UST, panic spread rapidly. From May 9 to 12, UST continued to decouple, and the price of Luna plummeted from $80 to below $0.0001, and the entire ecosystem collapsed within five days.

Since Luna Foundation Guard previously used more than $1 billion in Bitcoin reserves to support the stability of the UST exchange rate, but ultimately failed to prevent the collapse, this part of BTC assets further exacerbated the market pressure during the market sell-off. At the same time, many DeFi projects (Anchor, Mirror) in the Terra ecosystem have zero TVL on the chain, and users have suffered heavy losses.

This collapse triggered a chain reaction: the large crypto hedge fund Three Arrows Capital (3AC) held a large number of UST and Luna-related positions, and its capital chain was broken after the thunderbolt; subsequently, Celsius, Voyager, BlockFi and other CeFi lending platforms also experienced bank runs and eventually entered bankruptcy procedures.

In terms of on-chain performance, the transfer volume of ETH and BTC has risen sharply, and investors have tried to withdraw from all high-risk DeFi protocols, resulting in a sharp drop in the depth of multiple on-chain liquidity pools and a surge in DEX slippage. The entire market has entered an extreme panic state, and the panic and greed index has fallen to its lowest value in recent years.

This is a "global correction" of the trust model within the crypto ecosystem, which has shaken the feasibility expectations of "algorithmic stablecoins" as a financial hub, and at the same time has pushed regulators to redefine the risk scope of "stablecoins". Since then, stablecoins such as USDC and DAI have gradually emphasized collateral transparency and audit mechanisms, and market preferences have also clearly shifted from "income incentives" to "collateral security".

Trust collapse: FTX's off-chain credit crisis triggered by the explosion

In November 2022, FTX, a centralized exchange known as the "institutional trust anchor", collapsed overnight, becoming one of the most impactful "black swan" events in crypto history after Mt.Gox. This is a collapse of an internal trust mechanism that directly hit the credit foundation of the entire crypto financial ecosystem.

The incident began with a leaked Alameda balance sheet, which revealed that it held a large amount of its own platform currency FTT as collateral assets, triggering widespread market doubts about asset quality and solvency. On November 6, Binance CEO Zhao Changpeng publicly stated that he would sell his FTT positions, and the price of FTT quickly plunged, triggering a panic withdrawal of off-chain users. In less than 48 hours, the FTX platform fell into a run crisis, unable to repay customer funds, and eventually filed for bankruptcy protection.

FTX's thunderbolt directly pulled down the price of Bitcoin, from $21,000 to $16,000, a drop of more than 23% in seven days; Ethereum fell from around $1,600 to below $1,100. The amount of liquidation exceeded $700 million in 24 hours. Although it was not as large as the "312" scale, because this crisis occurred off-chain and affected many mainstream platforms, the loss of trust far exceeded the appearance that a single price plunge could reflect.

On the chain level, the exchange volume of USDT and USDC has risen sharply, and users have withdrawn from exchanges and transferred their assets to self-custodial wallets. The number of active addresses in cold wallets has reached a record high, and "Not your keys, not your coins" has become the main theme on social platforms. At the same time, the DeFi ecosystem has been relatively stable during this crisis. On-chain protocols such as Aave, Compound, and MakerDAO have not experienced systemic risks under the premise of transparent liquidation mechanisms and sufficient asset collateral, reflecting the initial verification of the decentralized architecture's ability to withstand pressure.

More far-reachingly, the collapse of FTX has triggered a re-examination of systemic risks in the crypto market by global regulators. The US SEC, CFTC, and financial regulators in many countries have launched investigations and hearing procedures, pushing compliance issues such as "exchange transparency", "proof of reserves", and "off-chain asset audits" to become mainstream agendas.

This crisis is no longer a "price-level fluctuation", but a comprehensive handover of the "scepter of trust". It forces the crypto industry to return to basic risk control and transparent governance from superficial price optimism.

2025 Tariff Crisis Detonates Systemic External Pressure

Unlike the internal crises in the crypto industry such as the FTX crash, the recent market crash caused by Trump's imposition of "minimum benchmark tariffs" has once again reproduced the global characteristics of the "312" period. It is not the collapse of a certain platform or the loss of control of a certain asset, but a systemic financial panic triggered by macro-level geopolitical conflicts, dramatic changes in the global trade structure and monetary policy uncertainty.

On April 7, U.S. stocks continued to open lower, and U.S. technology stocks and chip stocks plummeted. Nvidia fell more than 7%, Tesla fell nearly 7%, Apple fell more than 6%, Amazon and AMD fell more than 5%, Intel and ASML fell more than 3%. Blockchain concept stocks fell across the board, Coinbase fell about 9%, and Canaan Technology fell about 9%.

Interestingly, after the market reported that Trump was considering suspending tariffs on some countries for 90 days, the S&P 500 index fell more than 4.7% at the beginning of the session and then rose nearly 3.9%, the Dow Jones fell more than 4.4% at the beginning of the session and then rose more than 2.3%, the Nasdaq fell nearly 5.2% at the beginning of the session and then rose more than 4.5%, and BTC rose above $81,000.

Subsequently, the White House told CNBC that any statement about the suspension of (tariffs) for 90 days was "fake news", and the global capital market fell again. It is enough to see the pressure of the Trump administration's tariff policy on the global financial market.

Crossing multiple crashes: risk causes, transmission paths and market memory

From "312" to "tariff war", several major crashes in the crypto market have portrayed different types of systemic pressures faced by this emerging asset class. These crashes are not just differences in "declines", but also reflect the evolution of the crypto market in terms of liquidity structure, credit model, macro coupling, policy sensitivity and other dimensions.

The core difference lies in the "level" change of risk sources.

The 312 in 2020 and the tariff crisis in 2025 are both crashes dominated by "external systemic risks". The market is driven by the "cash is king" sentiment, which leads to a collective sell-off of on-chain and off-chain assets, which is an extreme presentation of the linkage of global financial markets.

The FTX and Terra/Luna incidents reflect the crisis of "internal credit/mechanism collapse", exposing the structural fragility under the centralized and algorithmic system; China's policy suppression is a concentrated manifestation of geopolitical pressure, showing how the crypto network responds passively when facing sovereign-level forces.

In addition to these differences, there are also some commonalities worth noting:

First, the "emotional leverage" of the crypto market is extremely high. Every price correction will be quickly amplified through social media, leveraged markets and on-chain panic behavior, forming a stampede.

Second, the risk transmission between on-chain and off-chain is becoming increasingly close. From the FTX crash to the whale on-chain liquidation in 2025, off-chain credit events are no longer limited to "exchange issues" but will be transmitted to the chain, and vice versa.

Third, the market's adaptability is increasing, but structural anxiety is also increasing. DeFi showed resilience in the FTX crisis, but exposed logical loopholes in the Terra/Luna collapse; on-chain data is becoming more open and transparent, but large liquidations and whale operations still often cause violent fluctuations.

Finally, every crash promotes the "maturity" of the crypto market, not more stability, but more complexity. Higher leverage tools, smarter liquidation models, and more complex gaming roles mean that there will be no fewer crashes in the future, but the way to understand it must be deeper.

It is worth noting that every crash did not end the crypto market. On the contrary, it promoted a deeper reconstruction of the market at the structural and institutional levels. This does not mean that the market will be more stable as a result. On the contrary, increased complexity often means that there will be no fewer crashes in the future. However, the way to understand the drastic fluctuations in the prices of such assets must be deeper, more systematic, and more compatible with the dual dimensions of "cross-system shocks" and "internal mechanism imbalances".

What these crises tell us is not that "the crypto market will eventually fail", but that it must constantly find ways to position itself between the global financial order, the concept of decentralization, and the risk game mechanism.