Crypto World Storm: A Review of Major Events and Market Impact Over the Years

Cryptocurrency investors who have experienced multiple significant events are undoubtedly veterans in this industry. This article will outline several far-reaching events to warn investors to act with caution.

Mentougou Incident

In February 2014, the then-largest Bitcoin exchange in the world, Mt.Gox, was hacked, resulting in the loss of nearly 850,000 Bitcoins, accounting for about 7% of the total Bitcoin supply globally. This incident led to an 80% plummet in Bitcoin prices, triggering a crisis of confidence in the crypto world.

However, due to the rapid increase in the value of Bitcoin, the remaining Bitcoin assets of Mt.Gox after liquidation are sufficient to cover all the losses of the creditors at that time. Recently, it was reported that Mt.Gox is preparing to distribute approximately 142,000 Bitcoins and 143,000 Bitcoins in cash to creditors, with a total value of over 9 billion dollars.

94 Incident

In 2017, the cryptocurrency market was booming, with various ICO projects emerging like mushrooms after rain. However, many projects had questionable quality and even suspected illegal fundraising and fraud.

On September 4th, seven ministries jointly issued an announcement categorizing ICOs as illegal financing activities. This policy caused the price of Bitcoin to plummet by 32%, while Litecoin's decline was even more severe at 57.3%.

Faced with regulatory pressure, numerous trading platforms have been forced to move overseas, and project parties have withdrawn coins one after another, leading to a spread of panic in the market. However, this crackdown did not stop the long-term rise of Bitcoin. By the end of 2017, Bitcoin's price reached a historic high of $20,000, with a sixfold increase within three months.

312 Incident

On March 12, 2020, affected by the global pandemic, the price of Bitcoin plummeted from $7966 to $3782, a drop of over 50% in two days. This crash shattered the myth of Bitcoin as a safe-haven asset, but also provided investors with a rare entry opportunity.

519 Incident

On May 19, 2021, influenced by regulatory policies, the price of Bitcoin dropped from $44,000 to $29,000, a decrease of 34%. This event led to a series of chain reactions such as mining farms shutting down and mining machines going overseas, and the market briefly believed that the bull market had ended.

However, the price of Bitcoin rebounded strongly in the following months, ultimately breaking through the new high of $67,000. This wave of market activity wiped out a large number of short sellers, once again proving the unpredictability of the market.

LUNA/FTX Explosion Incident

In 2022, the collapse of the LUNA ecosystem and the bankruptcy of a well-known trading platform occurred one after another, triggering a crisis of trust in the entire crypto world. The price of Bitcoin fell from around $60,000 at the beginning of the year to about $15,000, a decline of up to 75%.

These two incidents exposed serious issues in risk management and corporate governance within the crypto world, causing long-term impacts on the entire industry.

Summary and Insights

Looking back at these significant events, we can see that:

1. Events related to technology (such as the theft in Mentougou and the LUNA/FTX collapse) often have a long-term impact on the market and require a long time to restore investor confidence.

2. Market fluctuations caused by policy factors (such as the 94 and 519 events) are usually short-lived, and the market often recovers within a few months.

3. The impact of external factors (such as the 312 incident) on the market is relatively limited, and the recovery speed is relatively fast.

For investors, market volatility caused by technical risks and issues within the project itself is more concerning. In contrast, price declines due to policy or external factors may present better entry opportunities.

However, regardless of the reasons behind the market fluctuations, investors should maintain a cautious attitude and implement risk management. The development prospects of the crypto world remain fraught with uncertainty, and investors need to stay alert to industry dynamics and view market ups and downs rationally.