Crypto Assets Market Major Events Review

The Crypto Assets market has experienced several significant events that have had a profound impact on the industry's development. This article will review a few representative events, as well as their impact on the market and subsequent effects.

Mentougou Incident

In February 2014, the then-largest Bitcoin exchange, Mt. Gox, was hacked, resulting in the loss of approximately 850,000 coins, which accounted for 7% of the total global Bitcoin supply. This incident caused the price of Bitcoin to plummet by 80%, triggering a crisis of confidence in the Crypto Assets market.

However, due to the significant increase in Bitcoin prices in the following years, the remaining assets of Mt.Gox were actually sufficient to compensate all the losses of the creditors at that time. Recently, it has been reported that Mt.Gox is preparing to distribute approximately 142,000 Bitcoins and 143,000 in Bitcoin cash to creditors, with a total value exceeding 9 billion USD.

94 Incident

In 2017, regulatory authorities in mainland China conducted a rectification of the ICO market. On September 4 of that year, seven ministries jointly issued the "Announcement on Preventing Risks of Token Issuance Financing", classifying ICOs as illegal fundraising activities.

This move caused the price of Bitcoin to plummet by 32%, while Litecoin's decline was even more severe at 57.3%. Many exchanges were forced to move overseas, project teams rushed to withdraw coins, and panic spread throughout the market.

However, this blow was only temporary. Bitcoin quickly emerged from a super bull market, reaching a historical high of $20,000 by the end of 2017. Some exchanges continued to operate through coin-to-coin trading and over-the-counter fiat trading, and certain platforms seized this opportunity to rise and become industry giants.

312 Incident

On March 12, 2020, affected by the global pandemic, the price of Bitcoin fell from $7966 to $4410, and further dropped to $3782 the next day, with a maximum decline of over 50% within two days.

This crash is related to the global economic recession and the significant drop in the US stock market. Although some investors view Bitcoin as a safe-haven asset, there was no consensus in the market at that time.

It is worth noting that in just 4 years since the crash, the price of Bitcoin has risen more than 20 times.

519 Incident

On May 18, 2021, financial regulatory authorities in mainland China took action again, with the three major financial associations issuing a statement indicating that providing virtual currency trading services could involve illegal financial activities.

On May 19, the price of Bitcoin plummeted from $44,000 to $29,000, a decrease of 34%. Subsequently, events such as mine shutdowns, mining machines being moved overseas, and related applications being removed occurred in succession, causing the market to plunge into panic.

However, the market quickly rebounded. The price of Bitcoin broke new highs a few months later, reaching $67,000, causing significant losses for many short sellers.

LUNA/FTX Collapse Incident

In 2022, LUNA and FTX collapsed one after another, triggering a crisis of trust in the Crypto Assets market, and the market entered a deep bear market.

LUNA is an algorithmic stablecoin project that collapsed after a large-scale sell-off in May. FTX, which was the second-largest exchange by market capitalization at the time, collapsed after being exposed to issues such as internal management chaos and misappropriation of customer funds at the end of the year.

These two events had a huge impact on the market, with the price of Bitcoin dropping from $60,000 at the beginning of the year to around $15,000 by the end of the year, a decrease of 75%.

Summary and Insights

Looking back at these events, we can find:

1. Real events related to encryption technology (such as the theft in Mentougou and the LUNA/FTX collapse) often take a long time to restore market confidence.

2. The sharp decline caused by policy impacts (such as the 94 and 519 incidents) usually recovers quickly and may even trigger a subsequent bull market.

3. External factors such as the global pandemic-induced crash (Event 312) have a relatively short impact.

For investors, it is more important to focus on the issues raised by the encryption technology itself, as these issues may affect industry consensus and lead to prolonged downturns. On the other hand, crashes triggered by policies or external factors are often better buying opportunities.

Currently, it is widely believed in the industry that the application scenarios of Crypto Assets are about to explode. If large-scale applications really emerge, the market is expected to continue to maintain a strong growth momentum. However, the biggest risk in the development of the industry is losing the trust of investors, which requires all participants to collectively maintain the healthy development of the industry.