Stay vigilant in times of peace: the historical crash moments of Bitcoin

In a Bitcoin bull market, price fluctuations are dramatic and frequent. This article will explore historical Bitcoin pullbacks, revealing the risks and investment psychology behind them.

Bitcoin’s extreme volatility has long taught us to “accept it.” We seem to have become accustomed to the expectation that even in a seemingly unstoppable bull market, significant pullbacks are inevitable, shattering our hopes, dreams, and wallet balances.

Therefore, we all believe it’s perfectly understandable for Bitcoin to suddenly plummet by 50% on its way to six-figure or even higher prices.

Is this expectation reasonable?

First, it’s important to clarify that Bitcoin does indeed have a “tradition” of plummeting by approximately 80% from bull market peaks to bear market troughs. This has been almost unanimously the case in every cycle since Bitcoin’s first major surge in 2011.

However, this article does not discuss pullbacks during bear markets (for which you can refer to our previous analysis). Instead, we will focus on pullbacks during bull markets, as is currently the case.

The chart below shows Bitcoin’s price performance across six different time spans, ranging from three days to three months, presented in a scrolling format, from the cycle’s starting point (trough) to its all-time high (peak).

Each line represents a time span. For example, the dark purple line represents the percentage difference between each daily low and the opening price three days prior, while the green line represents a similar comparison over a three-month period.

The dashed line at the bottom represents a 50% retracement level. As shown in the chart, such a large retracement never occurred during the bull market from August 2015 to December 2017.

The largest retracement in this cycle occurred near the end of September 2017, with a 40% drop in two weeks.

However, the subsequent bull market from 2018 to 2021 experienced three significant retracements exceeding 50%.

One of these was the market crash triggered by the COVID-19 pandemic in March 2020, during which the stock market experienced a series of “Black Mondays.”

Bitcoin fell by 50% or more in almost all time spans, except for a three-month span which was slightly less than 50%, at 47%.

The other two significant retracements occurred in May and July 2021, when Bitcoin fell from an all-time high of over $60,000 to $30,000. However, in the following four months, Bitcoin quickly rebounded to a new high approaching $69,000.

This pullback has been relatively mild, with the most significant correction in the bull market occurring in the first week of August.

Bitcoin fell by 30% across multiple timeframes, dropping from a high of over $70,000 in June to a low of $49,200.

Of course, this doesn’t mean Bitcoin has lost its volatility. I still believe the market will continue to fluctuate.

It’s worth noting that historically, the most severe pullbacks have often occurred at the end of bull markets.

Therefore, the longer a bull market lasts without a significant pullback, the more unsettling the uncertainty surrounding its future direction becomes—this is part of the unique “excitement” of investing in Bitcoin.

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