A latest blog post from Grayscale examines some of Bitcoin’s biggest drawdowns in order to provide investors with potential lessons. In June of 2011, the world’s biggest cryptocurrency exchange, Mt. Gox, had its admin account hacked, causing Bitcoin’s price to plummet from $32 to $0.01 over the period of a few days.
In August of 2012, Bitcoin’s value dropped by 41% when Trendon Shavers halted withdrawals from his Bitcoin Savings and Trust. By capitalizing on the lack of awareness around this emerging asset class, Shavers promises Bitcoin investors a weekly return of 7%.
In addition, the Chinese government banned financial institutions from accepting Bitcoin as payment in December 2013, causing Bitcoin’s value to drop by 80% in 24 hours. Financial entities including banks and payment processors were included in this category.
After the cryptocurrency exchange Mt. Gox lost 850,000 Bitcoins (worth about $450 million at the time) in a significant attack in February 2014, the firm filed for bankruptcy, sending the price of the cryptocurrency down by 58%.
In June of 2015, when hackers stole 3.6 million ether from the Decentralized Autonomous Organization (DAO), Bitcoin dropped 31%. A year later, when Bitfinex reveals a security breach that resulted in the theft of over 115,000 BTC, the price of Bitcoin falls by 30% over the course of four days.
Bitcoin’s value drops by 84% in the calendar year after its all-time high of $19.6k, as investors lose faith in the projects soliciting funds via ICOs. The token dropped 48% in May because of the UST’s unwinding to zero. And just last month, BTC’s worth dropped by almost 25% in only five days when FTX declared bankruptcy.