Looking back at the history of the crypto market plunge: Every panic says it is the last

Author: ChandlerZ, Foresight News

In April 2025, the crypto market fell into a bloody storm again. The Trump administration once again launched a tariff stick, and sentiment in the global financial market has changed dramatically. Bitcoin fell by more than 10% in two days, and Ethereum even dropped by 20% at one point, with the amount of liquidation within 24 as high as US$1.6 billion. Just like several historic plunges in the past, this scene once again triggered collective anxiety: "Is this the end, or the beginning of a new round of collapse?"

But if we look back at the history of the crypto market, we will find that this is not the first time that everyone feels "this is over". In fact, every extreme panic is just a unique ripple in this asset curve. From "312" to "519", from the international financial panic in 2020, to the "crypto Lehman moment" caused by the chain reaction of FTX credit collapse, and then to this tariff crisis.

The scripts of the market continue to repeat, but investors' memories are always short-lived.

Based on real data, this article will reconstruct the "market scene" of the previous four historical plunges, compare dimensions such as declines, sentiment indicators and macro backgrounds, and try to extract a clue of rule for backtracking and prediction from these extreme moments: When risks come, how exactly does the crypto market bear pressure? How can it reshape its own narrative again and again in the impact of the system?

Overview of historical plunge: Familiar scripts, different triggers

In the past five years, the crypto market has experienced at least four systemic plunges, and their respective triggers have different backgrounds, but have triggered severe price adjustments and on-chain/off-chain ripple effects.

Judging from the data, "312" is still the most tragic in history, with BTC and ETH both falling by more than 50% on the day. At that time, the amount of liquidated in the entire network was as high as US$2.93 billion, and more than 100,000 people suffered liquidated in the stock, with the largest single liquidated invoice worth US$58.32 million. This scale of liquidation shows that market participants generally used high leverage (such as 10 times or even higher) at that time. When prices fell rapidly, the strong leveling mechanism was triggered, further aggravating the selling pressure and forming a vicious cycle.

At the same time, BitMEX's dramatic operation of "dragging the network cable" suspending trading exposed the fragility of market liquidity. At that time, other trading platforms were also in chaos. The cross-platform price difference between Bitcoin was as high as $1,000, and the arbitrage robot failed due to transaction delays and API overload. This liquidity crisis has led to a rapid shrinking of market depth, almost disappearing in pay orders, and selling pressure completely dominates the situation.

As the platform with the largest short order holdings at that time, its trading suspension actually became a "life-saving straw" for the Bitcoin price not to completely return to zero. If BitMEX does not interrupt trading, its depth exhaustion may cause the price to fall to near zero in an instant, further triggering a chain crash on other platforms.

Domino effect under the black swan

"312" is not a phenomenon isolated from the crypto market, but a microcosm of the global financial system crisis in early 2020.

Panic collapse in global stock markets

Since the Nasdaq Index hit a historical high of 9838 points on February 19, 2020, market sentiment has taken a sharp turn for the worse as the COVID-19 pandemic spreads around the world. Entering March, US stocks experienced rare circuit breakers, triggering the circuit breaker mechanism three times on March 9, 12 and 16. On March 12, the S&P 500 index fell by 9.5%, the largest single-day decline since "Black Monday" in 1987. The VIX Panic Index soared to a record high of 75.47. At the same time, the three major European stock indexes (Germany, UK, France) and Asia-Pacific markets (Nikkei and Hang Seng Index) entered a technical bear market simultaneously, with at least 10 Chinese stock indexes falling by more than 20%.

The systemic selling of the global capital market has quickly spread to all risky assets. Crypto assets such as Bitcoin and Ethereum have also encountered indiscriminate selling in this context. The "financialization resonance" of market risk preferences plummeted and cryptocurrencies and traditional assets have been taken.

The bloody washing of the commodity market

The traditional commodity market also collapsed in this crisis. On March 6, 2020, OPEC and Russia failed to reach an agreement on a production cut. Saudi Arabia immediately launched a price war, announced an increase in production and lowered crude oil prices, triggering a plunge in the global energy market. On March 9, U.S. crude oil (WTI) plummeted 26%, the biggest drop since the Gulf War in 1991; on March 18, WTI fell below $20. The out-of-control plunge of crude oil, the "blood of the global economy", has exacerbated investors' concerns about the global economy falling into a deep recession.

In addition, gold, copper, silver and other commodities also fell sharply, marking that "traditional safe-haven assets" are difficult to hedge against the market downturn in the early stages of the crisis, and the liquidity panic has gradually escalated.

The paradox of the US dollar liquidity crisis and safe-haven assets

With the collective decline in global asset prices, the US dollar liquidity crisis has emerged rapidly. Investors competed to sell all kinds of assets in exchange for US dollar cash, driving the US dollar index (DXY) to sharply rise from 94.5 to 103.0 in mid-March, a three-year high. This phenomenon of "cash is king" has caused all risky assets to be sold indiscriminately, and Bitcoin is not spared.

This is a crisis of liquidity contraction, credit deconstruction and emotional stampedeship, and the boundaries between tradition and crypto markets have been completely opened at this moment.

Policies heavy hammer: China's suppression storm in May 2021

In May 2021, the crypto market suffered a heavy blow. After hitting an all-time high of $64,000 in early May, the price of Bitcoin halved to $30,000 in just three weeks, with a maximum drop of more than 53%. This plunge is not caused by systemic failures on the chain, nor is it directly impacted by the macroeconomic cycle. It is mainly caused by a series of high-pressure regulatory policies issued by the Chinese government.

On May 18, the Financial Stability and Development Committee of the State Council of China clearly stated that it would "crack down on Bitcoin mining and trading behaviors". The next day, many provinces successively introduced targeted mining rectification measures, including major computing power cluster areas such as Inner Mongolia, Qinghai, and Sichuan. A large number of mines were forced to shut down, and the computing power was quickly withdrawn from the global network, causing the computing power of Bitcoin to drop by nearly 50% in two months.

At the same time, the bank account interface of domestic trading platforms has been investigated, and the OTC channel has been tightened, causing pressure to return funds. Although mainstream exchanges have gradually withdrawn from China's domestic market since 2017, the "high policy pressure" has still triggered risk aversion among global investors.

At the on-chain level, the interval between miners' block output has increased significantly, and the confirmation time of a single block soared from 10 minutes to more than 20 minutes, and network congestion has caused a surge in transfer fees. At the same time, market sentiment indicators have plummeted, the crypto panic and greed index has entered the "extreme panic" range, and investors' concerns about the continued policy escalation have become the dominant force in the short term.

This round of plunge is the first time that the crypto market has faced the confidence reshaping process caused by the "national suppression". In the long run, the migration of computing power has also unexpectedly promoted the increase in computing power share in North America, becoming a key turning point in the transformation of Bitcoin mining geographical pattern.

Systematic collapse: Terra/Luna and DeFi trust crisis

In May 2022, the Terra ecosystem's algorithmic stablecoin UST was deaned, triggering a "Lehman moment" in the decentralized financial world. Bitcoin had slowly fallen from $40,000 at the beginning of the year to around $30,000. As the UST mechanism failed, Luna price returned to zero in a few days, the DeFi ecosystem was rapidly unbalanced, and the BTC price further plummeted to $17,000. The entire adjustment period lasted until July, with the largest drop of 58%.

UST was originally an algorithmic stablecoin with the largest market value in crypto, and its stability mechanism relies on Luna as a coin collateral asset. Panic spread rapidly as the market began to question the stability of UST. From May 9 to 12, UST continued to dean, and Luna's price once plummeted from US$80 to below US$0.0001, and the entire ecosystem collapsed within five days.

As Luna Foundation Guard previously used more than $1 billion in Bitcoin reserves to support UST exchange rate stability, but ultimately failed to stop the collapse, this part of BTC assets further exacerbated market pressure in the market sell-off. At the same time, many DeFi projects (Anchor, Mirror) in the Terra ecosystem have returned to zero on TVL, and users have suffered heavy losses in funds.

This collapse triggered a chain reaction: the large-scale crypto hedge fund Three Arrows Capital (3AC) held a large number of UST-related positions and Luna, and the capital chain broke after the crash; subsequently, many CeFi lending platforms such as Celsius, Voyager, BlockFi also experienced bankruptcy runs, and eventually entered bankruptcy proceedings.

In terms of on-chain performance, the transfer volume of ETH and BTC has increased sharply, and investors have tried to withdraw all high-risk DeFi protocols, resulting in a sharp drop in the depth of multiple on-chain liquidity pools and a surge in DEX slippage. The entire market has entered an extreme state of panic, and the Panic and Greed Index has fallen to its lowest value in recent years.

This is a "global correction" of the trust model within the crypto ecosystem. It shakes the feasibility expectations of "algorithmic stablecoins" as a financial center, and at the same time pushes regulators to redefine the risk scope of "stablecoins". Since then, stablecoins such as USDC and DAI have gradually emphasized the transparency of collateral and audit mechanisms, and market preferences have also significantly shifted from "revenue incentives" to "collateral security".

Trust collapse: Off-chain credit crisis triggered by FTX thunder

In November 2022, the centralized exchange FTX, known as the "institutional trust anchor", collapsed overnight, becoming one of the most impactful "black swan" events in crypto history after Mt.Gox. This is a collapse of an internal trust mechanism, which directly hit the credit foundation of the entire crypto financial ecosystem.

The incident began with a leaked Alameda balance sheet, which disclosed that it held a large amount of its own platform currency FTT as collateral assets, triggering widespread doubts about asset quality and solvency in the market. On November 6, Binance CEO Zhao Changpeng publicly stated that he would sell his FTT position, and the FTT price quickly plunged, triggering a panic withdrawal wave of off-chain users. In less than 48 hours, the FTX platform was in a bank run crisis and was unable to repay customer funds, and eventually filed for bankruptcy protection.

The FTX crash directly pulled down the price of Bitcoin, falling from $21,000 to $16,000, a drop of more than 23% in seven days; Ethereum fell below $1,100 from around $1,600. The amount of liquidation in 24 hours exceeded US$700 million. Although it was less than the scale of "312", since the crisis occurred off-chain and affected many mainstream platforms, the loss of trust far exceeded the appearance that a single price plunge can reflect.

At the on-chain level, the exchange volume of USDT and USDC has increased sharply, and users have withdrawn from the exchange and transferred their assets to self-custodial wallets. The active address of cold wallet hits a record high, and "Not your keys, not your coins" has become the main theme on social platforms. At the same time, the DeFi ecosystem is relatively stable in this crisis. On-chain protocols such as Aave, Compound, and MakerDAO do not experience systemic risks under the premise of transparent liquidation mechanism and sufficient asset mortgage, reflecting the preliminary verification of the decentralized architecture in its stress resistance.

More far-reachingly, the FTX collapse has triggered a reexamination of systemic risks in the crypto market by global regulators. The US SEC, CFTC and financial regulators in many countries have launched investigation and hearing procedures to promote compliance issues such as "exchange transparency", "reserve certificates" and "off-chain asset audit" to become the mainstream agenda.

This crisis is no longer a "price-level fluctuation", but a full handover of "Scepter of Trust". It forces the crypto industry to go from the superficial price optimism, returning to basic risk control and transparent governance.

2025 Systematic external pressure triggered by the tariff crisis

Unlike internal crises in the crypto industry such as the FTX crash, the recent market plunge caused by Trump's "minimum benchmark tariffs" has once again reproduced the global characteristics of the "312" period. It is not a collapse of a certain platform or an asset out of control, but a systemic financial panic triggered by geopolitical conflicts at the macro level, drastic changes in the global trade structure and monetary policy uncertainty.

On April 7, US stocks continued to open lower, US technology stocks and chip stocks fell sharply, Nvidia fell more than 7%, Tesla fell nearly 7%, Apple fell more than 6%, Amazon and AMD fell more than 5%, and Intel and Asma fell more than 3%. Blockchain concept stocks generally fell, Coinbase fell about 9%, and Canaan Technology fell about 9%.

Interestingly, after the market reported that Trump was considering suspending tariffs on some countries for 90 days, the S&P 500 fell more than 4.7% at the beginning of the session and then rose nearly 3.9%, the Dow Jones Industrial Average fell more than 4.4% at the beginning of the session and then rose more than 2.3%, the Nasdaq fell nearly 5.2% at the beginning of the session and then rose more than 4.5%, and BTC rose more than 81,000 US dollars.

The White House then told CNBC that any statement about the 90-day suspension of (tariffs) is "fake news" and the global capital market has turned to decline again. This shows the pressure on the global financial markets by the Trump administration's tariff policies.

Crossing multiple collapses: causes of risks, transmission paths and

market memory

From "312" to "Tariff War", several major plunges in the crypto market have portrayed the different types of systemic pressures faced by this emerging asset class. These collapses are not just differences in "falls", but also reflect the evolution of the crypto market in dimensions such as liquidity structure, credit model, macro coupling, and policy sensitivity.

The core difference lies in the "level" changes in the source of risk.

The 312 in 2020 and the tariff crisis in 2025 are both collapses dominated by "external systemic risks". The market is driven by the sentiment of "cash as king", which leads to the collective sale of assets on and off-chain assets, which is the ultimate manifestation of linkage to the global financial market.

The FTX and Terra/Luna incidents reflect the crisis of "internal credit/mechanism collapse", exposing the structural fragility under centralization and algorithmic systems; China's policy suppression is a concentrated reflection of geopolitical pressure, showing how encrypted networks passively respond to sovereign-level forces.

In addition to these differences, there are also some notable commonalities:

First, the "emotional leverage" in the crypto market is extremely high. Every price pullback will be rapidly amplified through social media, leveraged markets and on-chain panic behavior, forming a stampede.

Second, the risk transmission between the chain and the chain is becoming increasingly close. From the FTX burst to the whale chain clearing in 2025, off-chain credit events are no longer limited to "exchange issues", but will be transmitted to the chain, and vice versa.

Third, the market 's adaptability is increasing, but structural anxiety is also increasing. DeFi shows resilience in the FTX crisis, but it exposes logical loopholes in the Terra/Luna crash; on-chain data is becoming more and more open and transparent, but large liquidation and whale trading still often cause severe fluctuations.

Finally, every crash drives the "maturation" of the crypto market, not more stable, but more complex. Higher leverage tools, smarter liquidation models, and more complex game roles mean that there will be no fewer plunges in the future, but the way to understand it must be deeper.

It is worth noting that every crash has not ended the crypto market. On the contrary, it promotes a deeper reconstruction of the market at the structural and institutional levels. This does not mean that the market will be more stable as a result. On the contrary, increasing complexity often means that there will be no less plunge in the future. However, understanding the way such asset prices fluctuate dramatically, it must be deeper, more systematic, and more compatible with the dual dimensions of "cross-system impact" and "internal mechanism imbalance".

What these crises tell us is not that "the crypto market will eventually fail", but that it must constantly find its own positioning between the global financial order, the concept of decentralization and the risk game mechanism.