Without a doubt, 2022 has been a ‘annus horribilis’ for Bitcoin and its peers. However, the cryptocurrency industry and markets have been there before.
In Bitcoin’s 12-year history, there have been four major bull/bear cycles. The asset and industry are written off and declared dead each time by doomsayers and the mainstream media.
Furthermore, according to 99Bitcoins’ obituaries page, Bitcoin has ‘died’ 467 times! The first BTC “death” was reported in December 2010, and the most recent was on November 30, 2022. The year with the most ‘deaths’ was 2017, when the asset was written off at least 124 times by mainstream media.
Grayscale, the world’s largest institutional crypto asset manager, has compiled a list of ten instances in which Bitcoin has recovered from catastrophic crashes.
The first major drop in Bitcoin prices occurred in 2011, when the asset dropped by 99%. The aftermath of the Mt. Gox hack and meltdown sent prices on the beleaguered exchange plummeting from $32 to $0.01.
Bitcoin fell 80% in 24 hours in late 2013 after the Chinese government prohibited financial institutions from using the asset as a form of payment.
Another Mt. Gox hack in February 2014 caused BTC prices to drop by nearly 60%. At the time, the exchange handled up to 80% of the world’s Bitcoin trade.
The DAO hack in mid-2015 shook both Ethereum and Bitcoin prices. Ethereum experienced a hard fork. The existing chain was renamed Ethereum Classic (ETC), and the new blockchain was renamed Ethereum (ETH) as we know it today. In 2016, there was also a Bitfinex hack, which caused BTC prices to plummet.
A massive crackdown on initial coin offerings (ICOs) in 2018 caused BTC prices to fall 84% by the end of the year. Prices fell as low as $3,200 after reaching a high of $20,000 at the end of 2017.
When governments around the world implemented lockdown regimes in March 2020, BTC prices plummeted. In that black swan event, BTC dropped by more than 50% to around $5,000.
Bitcoin markets capitulated twice this year, in May and November. They both occurred following the failures of major platforms Terra/Luna and FTX, respectively. The first fell 50% from $40,000 to $20,000 in two slides in May and June. The second resulted in a 25% drop following the FTX meltdown.
Bitcoin has recovered from every incident so far, and there is no reason why it won’t do so again this time.
To put things in perspective, BTC is currently trading 134% higher than it was three years ago at this time.
BTC prices have fallen by 63.5% since the beginning of 2022. They hit a bear cycle low of $15,700 on Nov. 22, but have since regained some composure to remain range bound.
According to analysts, bull market signals are not expected until mid-2023. Until then, the consolidation is likely to continue, with the possibility of a slight uptick to reclaim the $20,000 level.
If history repeats itself, the BTC halving event in May 2024 will most likely be the primary catalyst for a bull market. Before the halving, there was a slight recovery before the bulls rallied after block rewards were reduced.