1. The Mentougou incident
In February 2014, the Mentougou incident was regarded as one of the most serious events in the history of the cryptocurrency circle. At that time, the world's largest Bitcoin exchange, MTGOX, was hacked, losing nearly 850,000 Bitcoins, accounting for 7% of the total Bitcoin supply. This incident not only caused Bitcoin to plummet by 80% but also triggered a crisis of trust in the crypto market.
2. The 9.4 incident
The 94 incident occurred in 2017 and was triggered by regulations from mainland China.
On September 4, 2017, the central bank and seven ministries defined ICO (Initial Coin Offering) as an unauthorized illegal public fundraising activity. The announcement stated that ICOs were suspected of illegal token issuance, illegal securities issuance, and illegal fundraising, severely disrupting the economic and financial order.
After the announcement was released, exchange tokens experienced a cliff-like drop, various tokens fell below their issuance prices, Bitcoin dropped by 32%, and 100,000 people in the crypto community lost 160 million in assets overnight, marking a dark moment.
3. The 3.12 incident
On March 12, 2020, according to Binance data, Bitcoin fell from around $7,900 to around $4,410, experiencing its darkest hour on March 13, when it dropped to around $3,780, with a maximum decline of over 50% in two days. At that time, the global economy was in recession due to the impact of the pandemic, and the U.S. stock market had already begun to plummet. Many crypto investors viewed Bitcoin as a safe-haven asset, but whether an asset is a safe haven ultimately depends on the consensus among more investors.
4. The 5.19 incident
On May 18, 2021, the central bank issued a notice stating that the three major associations in the financial industry announced that providing virtual currency trading services was suspected of illegal financial activities. There was no significant drop that day, but on the night of May 19, Bitcoin fell from around $44,000 to around $29,000, a drop of 34%.
5. The LUNA black swan event
This incident began with a South Korean individual, Do Kwon, who established a public chain ecosystem called Terra. This ecosystem mainly operates through these two coins:
One is the token Luna on the Terra ecosystem.
Another stablecoin on the Terra chain is UST.
These two coins interact in the following way:
One UST is valued at 1 dollar worth of Luna. This means if the price of Luna is $1, you can exchange it for one UST; if the price of Luna rises to $100, you can exchange it for 100 UST.
UST and Luna have a "mutual destruction and minting" relationship. This means that when you exchange Luna for UST, there is one less dollar's worth of Luna in the market and one more UST, and when you exchange UST for Luna, there is one less UST in the market.
In May 2022, many large holders began to sell UST, causing the price of Luna to drop by over 90%, falling to $10, and UST completely decoupled, dropping to $0.60.
On May 12, Luna continued to plummet by 99%, nearly reaching zero, and the price of UST fell below $0.20.
On May 13, many exchanges delisted Luna and suspended trading, and the Terra public chain went offline.
The LUNA black swan event marked a significant turning point in the crypto market, triggering a major crisis in the decentralized finance (DeFi) sector and having a profound impact on the market.
6. The FTX explosion incident
Lastly, it must be said that the FTX incident at the end of 2022 truly shocked many crypto users.
FTX, as the second-largest exchange in the crypto market at the time, received investments from institutions like Sequoia, Temasek, and BlackRock, achieving a valuation of $32 billion in the primary market.
At the end of November 2022, it collapsed abruptly, with internal management in disarray and random misuse of client funds.
With the collapse of FTX, Binance further solidified its position as the leading exchange.
The FTX explosion incident triggered a crisis of trust in the entire cryptocurrency market, severely impacting the market.
In 2022, affected by LUNA and FTX, the price of Bitcoin fell from around $60,000 to around $15,000, a drop of 75%.