The Day When Bitcoin Actually Died – Largest Drop and Recovery Ever

The Day When Bitcoin Actually Died – Largest Drop and Recovery Ever

‘Bitcoin is dead’ – a statement that has surfaced multiple times in its 10-year history. Most recently in November 2018 as the price plummeted from $6000 to $3000 in less than 15 days.

Apart from price sentiments, the obvious cause of death is based on miner capitulation. If the miners run out of business due to non-profitability, the entire thing would fall on its face.

In January 2015, the fall was so disastrous that it would have flipped many believers into hating it. Almost a year after the Mt. Gox fiasco, the price fell from a high of $1160 to around $250. The price seemed to slowly make a revival towards $400 from the disastrous drop when this happened.

BTC/USD 1-Day Chart on Coinbase (TradingView)

On 14th Jan 2015, the price of Bitcoin at CoinBase closed at $120, a 75% fall from $398 in less than a week. Although Coinbase was an exception, the close on Bitstamp was $171.

According to a CNBC report from 14th January, there was no obvious reason for the drop. It was possible due to the Bitstamp Hack where the crypto exchange reported a $5 million theft. The exchange was closed down for 4 days. (Something that in today’s market could lead to surveillance drones around the exchange on the 2nd day.)

BTC/USD 1-Day Chart on Bitstamp (TradingView)

Nevertheless, the aftermath was primarily seen on Bitfinex with over 70% of the sell-off volume. Bitstamp had resumed business 3 days prior to the crash. Moreover, at the time Bitcoin’s circulating supply was about 13.7 million. And the hackers only stole about 1000-1200 Bitcoins (less than 0.05% of total market capitalization).

Also, the recovery can after the drop lead the price into gaining 23% the next day. The resurrection occurred almost instantly.

Can it Happen Again?

Interestingly enough, Bitcoin short swaps were traded in the market at Bitfinex even then. A large whale could have shorter the price and possibly sold his large share only to buy back at a cheaper rate. Like that, an investor can make multiple times the profit.

A lot has changed in the market since then. Reportedly, until now 378 instances of Bitcoin’s death have been observed in the market.

However, even at $130 billion dollars, its’ market capitalization is considerably low. Hence, if we can see a rise of about 35% in less than 30 hours in 2019, we could also see a drop of similar scales.

What other instances of Bitcoin’s death report can you site? Please share! 

Nivesh

Hello, I am an Electrical Engineer currently pursuing Actuarial studies. I work as an analyst reporter for CoinGape. Here to share my knowledge and observation of the crypto space. Feel free to contact!

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