When panic knocks, look for signs of change in the crypto market from 239 panic moments in 7 years
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The violent fluctuations in the cryptocurrency market are closely related to the extreme swings in investor sentiment. The "Fear and Greed Index" has become an intuitive data of the mentality of investors. On April 7, the global financial market was shaken by concerns about increased global tariffs, followed by a surge of panic.
Looking back, since 2018, the crypto market has experienced 239 "extreme panic" moments with an index below 20. This article does not intend to exaggerate the negative sentiment of the market, but hopes to systematically review these key nodes, learn from history, and try to discover the cyclical laws behind them. The study focuses on the distribution characteristics and duration of these panic moments, and analyzes whether there are market signals worthy of attention.
2018: Year-round panic under the shadow of regulation
From the perspective of the panic index, this period is characterized by a panic from time to time in the market over a long period of time. From February 2018, BTC fell 70% from a high of $19,000 in 50 days, plummeting to around $5,900. This was the first panic.
During the process of hitting the bottom several times, the market showed panic. According to the data, there were 93 panic moments with a panic index below 20 in 2018, making it the year with the most panic moments. Among them, the panic index reached a minimum of 8 on February 5, lasted for 23 days from August 20 to September 11, and lasted for 27 days from November 20 to December 16.
From the short-term market, these panic stages are almost all short-term bottoms. After the panic, the market ushered in a short-term rebound to varying degrees. However, these rebounds ultimately failed to form a new trend, but became additives to the market downturn.
The following are the news factors behind these panic moments:
February 4-5, 2018: The SEC launched a large-scale ICO investigation in February; many banks banned the use of credit cards to purchase Bitcoin.
March 28-April 1, 2018: SEC announces it will begin regulating cryptocurrency institutions
May-June 2018: South Korean cryptocurrency exchange Coinrail was hacked, with losses exceeding $40 million; CFTC issued subpoenas to several large exchanges including Coinbase, Kraken and Bitstamp.
August-September 2018: SEC postponed its decision on the application for Bitcoin exchange-traded funds (ETFs), and five Chinese ministries issued risk warnings to prevent "virtual currency" speculation.
November 20-December 16, 2018: Bitcoin prices fell 80% from their peak, losing nearly a third of their value in a week, hitting a low of about $3,100 in December 2018. The growth of Bitcoin miners stopped in August, and computing power began to decline significantly in November.
Judging from the impact of these major news, the source of panic in 2018 was mainly affected by the policy side, and the regulatory news from regulatory agencies such as the SEC and CFTC caused a panic effect.
After these panic moments, the market entered an uptrend cycle after about 4 months of consolidation.
2019: Panic sell-off after the small bull market
The panic moments in 2019 were much less than those in 2018, with the index below 20 20 times. During this stage, the panic period was divided into two parts, one of which was the continuation of the late bear market in 2018, and the other was the panic cycle caused by the first rapid decline after reaching the peak. Especially in the correction phase after the rise, the panic caused was even more serious than the late bear market. On August 21, 2019, the panic index fell to 5, becoming the lowest panic index in the history of cryptocurrencies. However, this extreme panic mainly stems from the continuous correction of the market after the frenzy of the rise, which makes the market nerves extremely fragile.
In fact, the panic moments in 2019 were gradually affected by the news, but hacker attacks and security vulnerabilities also had a significant impact on the entire market. In 2019, about 10 major exchanges reported being hacked throughout the year, among which Binance Exchange was stolen 7,000 bitcoins in May, which attracted market attention.
In addition, China began to adopt restrictive policies on Bitcoin mining that year, and a large number of miners began to move overseas. Behind the several plunges in 2019, it seems difficult to find direct sources of information, which is more like the self-regulation of the market.
2020: The "3.12" black swan continued the panic for 43 days
In the ranking of panic moments in the crypto market, 2020 is definitely the most painful year. Although from a time point of view, the panic moments in 2020 are the most concentrated, mainly in March and April. There is no index below 20 in the rest of the time.
But the 3.12 plunge caused the market to fall into panic for a long time in March and April. According to statistics, in March 2020, there were 6 days with a panic index below 10, which became the highest in history. In March and April, there were 43 days when the market was in extreme panic with a panic index below 20. It became the two months with the most concentrated panic time in the history of crypto.
The panic in March 2020 was mainly caused by the outbreak of the new crown epidemic that year. The global financial market encountered "Black Thursday" on March 12. As the market fell, the high-leverage positions were liquidated on a large scale in a short period of time, causing Bitcoin to fall 51% in one day.
Fortunately, the market was optimistic for most of the rest of 2020. After the important turning point on March 12, the cryptocurrency market entered a new round of rising cycle. According to the report of Coingecko, the market value of the top 30 cryptocurrencies increased by 308% in 2020, exceeding the 62% in 2019. Bitcoin soared from a low of $3,850 to a high of $64,895. The increase in 400 days was nearly 17 times.
2021: FUD strikes and market shocks
The market in 2021 once again suffered a sharp decline. The reasons for this market crash are multifaceted. First, Tesla CEO Elon Musk announced on May 12 that Tesla would suspend the use of Bitcoin to buy cars due to concerns about the impact of Bitcoin mining on the environment. Secondly, the People's Bank of China reiterated on May 18 that digital tokens cannot be used as currency, and prohibited financial institutions and payment institutions from providing services related to cryptocurrencies, which further exacerbated the selling pressure in the market.
The subsequent market fell into a slump, and market sentiment was in a state of panic during the consolidation phase before August.
But after entering August, the crypto market ushered in another wave of sharp rises, with the price of Bitcoin reaching as high as $69,000. Since then, in December, as the market entered a new round of declines. The crypto market fell into panic again.
Overall, the panic moment in 2021 basically marked the end of a period of rising market.
2022: Luna crash brought 65 consecutive days of panic
The panic times in 2022 are generally divided into three parts. The first two panics were still caused by the continuation of the downward trend in 2021. The third was a panic moment that lasted 65 days, and this panic lasted the longest in history. The panic index also fell to 6 at the lowest, second only to the lowest point of 5 in 2019.
The 2022 crash was mainly caused by the Terra/Luna crash. On May 9, UST was decoupled from the US dollar and the Terra blockchain was suspended. Celsius Network suspended all transfers and withdrawals on June 13. Three Arrows Capital (3AC) defaulted in June and was ordered to liquidate in July. Bitcoin fell below $30,000 for the first time since July 2021. On July 13, the global cryptocurrency market value reached $871 billion.
But the 2022 crash was not only about Luna's decoupling. In November, the FTX exchange crashed, which also brought the market into panic. Bitcoin fell to $15,479, the lowest point in nearly three years. However, this crash did not seem to show much fluctuation in the panic index, with the index falling to 20 at its lowest.
But it can also be seen from here that when the market enters the late stage of a bear market, events that the market intuitively feels very strongly about will not be shown much on the index. Thinking the other way around, when the market seems to be in a panic, but the index does not fluctuate much, it may also be the moment when the market is about to change.
2023-2024: Panic Ebb and Market Recovery
After the market bottomed out in 2022, the market completely returned to the rising cycle. The panic index did not fall below 20 throughout 2023, and it did not fall to 17 again until August 2024, when an extreme panic occurred. However, this panic was caused by a rapid correction during the rise.
2025: Panic Reappearance and Future Fog
The panic moments in 2025 seem to be frequent again. As of April 8, the panic index has fallen below 20 three times. Among them, it fell to 10 on February 26. It fell to 15 again on March 3. On April 7, affected by the Trump administration's global increase in tariffs, the global financial market collapsed and Bitcoin fell below $75,000. However, the panic index did not fall below 20. This time, it seems that the hint given by the panic index is similar to that when FTX collapsed in November 2022. However, after the collapse of FTX, the crypto market really entered the bottom, began to rebound and grew into a bull market. And this time, I wonder if the impact of tariffs is the beginning of a decline or a signal of the bottom?
Thinking behind 239 panic moments
Overall review of all panic moments since the birth of the panic index, according to statistics, in more than 6 years, the crypto market has experienced a total of 239 extreme panics (values below 20). In most cases, this panic moment is caused by a sharp drop in the market, and they are all at a short-term stage bottom.
Through further analysis of these panic moments, the following interesting rules are summarized.
1. Panic moments are basically concentrated in two stages. One is the end of the bear market. With the shrinking of market liquidity, the market becomes more sensitive to market fluctuations. Generally, black swan events will occur frequently at this time, such as 3.12 or the collapse of FTX. The other is at the beginning of the end of the bull market. When the price hits the top for the second time, it begins to fall back. The panic selling caused by this stage is also likely to cause extreme panic. When the market is in a unilateral upward trend, the panic index has almost never been lower than 20.
2. The single duration of the panic index seems to be more meaningful. Whether it is November to December 2018 (27 consecutive days below 20), or March to April 2020 (43 consecutive days below 20), or May to July 2022 (65 consecutive days below 20), this stage of continuous panic in a concentrated period of time is often a feature of the market approaching the bottom. When the market continues to panic, it is the beginning of the extreme.
3. Sporadic panic moments with relatively long intervals often have little reference value for judging market trends. Many people in the market believe that when the market enters extreme panic, it often rebounds. In most cases, this rule does work in the short-term market, but if you magnify the cycle, you will find that such sporadic panic moments with long intervals do not mean that the market has turned around, but often only mean that the market is still in a bear market (refer to the panic moments from February to November 2018 or July to September 2019).
4. The panic moments under the panic index have become less and less in recent years, with 93 in 2018, 73 in 2022, but only 1 in 2023 and 2024. On the one hand, the size of the crypto market is getting bigger and bigger, and the volatility is not as severe as before, which reduces the occurrence of panic moments. But on the other hand, after the relatively stable market in the past two years, the market may enter a stage with more frequent panic moments in 2025.
Looking at the 239 "extreme panics" in more than six years from 2018 to the beginning of 2025, we can get a glimpse of a certain law of the tide of crypto market sentiment: panic often appears at the end of the bear market and the beginning of the decline of the bull market. Among them, the deep panic for many consecutive days is more likely to indicate the approach of the stage bottom than sporadic panic, which confirms the market philosophy of "extremes will be reversed".
History will not repeat itself simply, but it will always be surprisingly similar. Understanding the signals transmitted by the panic index, prudently distinguishing short-term fluctuations from long-term trends, and making comprehensive judgments based on macro events and market structure changes will be an important reference for investors to navigate in the ever-changing world of crypto. In the end, whether the current market is the prelude to a new round of decline or another bottom signal of "panic is opportunity" still needs time to give an answer.
