Author: Lim Yu Qian, Coingecko; Translated by Wuzhu, Golden Finance
What was the biggest correction in the cryptocurrency market?
The worst correction in the global crypto market over the past decade was a 39.6% plunge on March 13, 2020, due to Covid-19. The massive sell-off caused the total cryptocurrency market capitalization to plummet from $223.74 billion to $135.14 billion.
By comparison, the largest cryptocurrency market sell-off so far this year was significantly less severe at just -8.4%, occurring on March 20, 2024. Likewise, while the most recent decline spanned four consecutive days of declines, causing the total cryptocurrency market cap to shrink from $2.44 trillion on August 2 to $1.99 trillion on August 6, none of these declines were large enough to be considered a market correction.
In fact, crypto has not recorded a single day of market correction since the FTX crash in November 2022.
Bitcoin also experienced its largest price correction of -35.2% on March 13, 2020, while Ethereum experienced the second largest price correction of -43.1% on the same day as crypto investors fled risk assets overnight due to global uncertainty.
The second largest cryptocurrency correction occurred on September 14, 2017, when the total cryptocurrency market capitalization experienced a -22.3% correction, falling from $136.55 billion to $106.14 billion. This coincides with Bitcoin’s third largest price correction of -20.2% on the same day. This correction came against the backdrop of relatively strong performance throughout the year, with both the cryptocurrency market and Bitcoin recovering quickly the next day, highlighting the high volatility of cryptocurrencies.
How long will the cryptocurrency correction last?
Over the past decade, the longest cryptocurrency correction lasted only 2 days at most. Since 2014, the global cryptocurrency market has experienced 3 such consecutive corrections. These two corrections occurred in early 2018, when the cryptocurrency market began to cool down after setting new highs, and at the end of 2022 due to the FTX crash and contagion:
January 16 (-11.8%) to 17 (-13.4%), 2018
February 5 (-10.3) to 6 (-19.0%), 2018
November 9 (-10.1%) to 10 (-13.5%), 2022
That being said, there have been instances of crypto market corrections, but not in quick succession. For example, during the 2022 Terra Luna crash, the total crypto market cap fell 12.0% on May 10, briefly stabilized the next day, but then fell another 11.0% on May 12.
Meanwhile, Bitcoin has only recorded 2 consecutive multi-day crypto adjustments. The first was in early 2015 amid regulatory concerns and adverse developments, including the Bitstamp centralized cryptocurrency exchange hack. Bitcoin’s next 2-day price adjustment occurred during the debate over the proposed Bitcoin Infinite fork.
Notably, two of Bitcoin’s longest price corrections were related to issues with the asset itself, rather than broader cryptocurrency developments:
January 13 (-17.5%) to 14 (-22.3%), 2015
March 17 (-11.8%) to March 18 (-10.4%), 2017
Ethereum, on the other hand, has experienced 6 consecutive price adjustment days to date. While Ethereum’s first two longest price adjustments occurred in the asset’s early years, the third price adjustment in June 2016 was the result of the Dao hack. Ethereum’s subsequent 2-day price adjustments coincided with global cryptocurrency sell-offs during the 2018 bear market and the 2022 FTX crash.
October 30, 2015 (-10.5%) to 31, 2015 (-12.9%)
February 16 (-17.9%) to 17 (-14.3%), 2016
June 17 (-24.9%) to 18 (-27.3%), 2016
February 5 (-11.4%) to 6 (-18.0%), 2018
November 20 (-15.4%) to 21 (-12.6%), 2018
November 9 (-15.0%) to 10 (-17.9%), 2022
How many days does a cryptocurrency correction last?
From 2014 to date, cryptocurrencies have experienced 62 days of market corrections, which accounts for 1.6% of this time. The average cryptocurrency market correction on these days was -13.0%, which is just 3 percentage points above the technical cutoff definition of a market correction.
In 2018, cryptocurrencies experienced 18 market corrections, double the previous highest number of market corrections recorded in 2017, which was nine days. The frequency of cryptocurrency market corrections in 2018 was likely due to the bearish conditions of volatility at the time, as cryptocurrencies cooled off from the bull run that brought the asset class more mainstream acceptance.
Notably, despite the challenging macroeconomic environment, cryptocurrencies experienced 0 correction days in 2023 as the market was able to consolidate and gradually recover. Bitcoin and Ethereum also did not experience any price correction days last year.
While the global cryptocurrency market and Bitcoin have not experienced any correction days so far this year, it remains to be seen whether this will be the case for the rest of 2024. On the other hand, Ethereum has already experienced 2 days of price corrections this year, namely -10.1% on March 20 and -10.0% on August 6, 2024.
Top Cryptocurrencies Correct
The ranking of the top 20 daily adjustments in the global cryptocurrency market between January 1, 2014 and August 6, 2024 is as follows:
Ranking the 20 largest daily price adjustments for Bitcoin over the same period:
The ranking of the top 20 daily Ethereum price adjustments during this period is as follows:
