Whether you’re new to investing or just want to know what’s going on in the market, you need to know what a bear market is and what it entails. Read on to find out the answers to these and other questions.
What is a bear market?
Bear markets are part of a cycle where a prolonged price decrease exists. They are not unique to the cryptocurrency market but occur in stocks and commodities. In a bear market, the value of cryptocurrencies falls by at least 20% of its former value. This price reversal could be a result of various market forces at work.
A bear market can last for extended periods or wrap up in a few weeks, depending on investor sentiments. A crypto bear market presents an ideal investment opportunity. Bear markets differ historically and have no definite cycle. On average, a bear market lasts up to 289 days; however, it can exceed or fall below this range. This article explores the four of the biggest bear markets that occurred in crypto.
DDoS Attacks on Mt. Gox
Mt. Gox, one of the most prominent Bitcoin exchanges in the early years of the first cryptocurrency, had grown to handle around 70% of all Bitcoin trades. Such a large point of activity for Bitcoin was bound to experience problems at some stage.
After reaching a high of $260, Mt. Gox was forced to suspend trading to cool down the market. Around that time, the exchange was also getting hammered by DDoS attacks by cyber attackers. The price of Bitcoin dropped down to $55.59 when trading resumed – a fall of over 70%.
The Crypto Winter of 2018
From the name crypto winter, you will deduce that this bear market was one of the biggest. At this time, Bitcoin wasn’t the only crypto on the block, as Ethereum had emerged as a serious alternative and managed to capture 30% of the market by mid-2017. The crash affected all crypto, not just Bitcoin.
The sell-off began in December 2017 and wouldn’t calm down until February 2018, followed by months of consolidation and another price dip later that year. But the main damage was done between January and February, with Bitcoin losing nearly 65% of its value. ETH lost almost half of its value during the same period.
Mt. Gox Hack
In February 2014, Mt. Gox abruptly halted all withdrawals from its platform, citing technical issues and security concerns. The company’s website went offline, and rumors circulated that the exchange had been hacked. A few days later, Karpeles held a press conference in Tokyo where he confirmed that Mt. Gox had indeed been hacked, and miscreants had stolen 850,000 Bitcoin — worth approximately $450 million at the time.
The hack was one of the largest thefts in the history of Bitcoin and cryptocurrency, and it had a significant impact on the broader industry. The price of Bitcoin dived in the days following the announcement, with many investors and traders losing confidence in the security and reliability of digital currency exchanges.
LUNA/UST – May 11 – 12, 2022
The crash in the crypto markets involving TerraUSD (UST) and Terra (LUNA) still has so many stunned. UST worked with its sister token, LUNA, to maintain a price of around $1 using a set of on-chain mint-and-burn mechanics. In theory, these mechanics are supposed to ensure that $1 worth of UST can be used to mint $1 of LUNA – a sort of floating price shock absorber for UST volatility.
The massive selling pressure led to sharp drops in the prices of both LUNA and UST. Eventually, the market cap of LUNA flipped that of UST, leading to one of the biggest crashes and losses for many crypto investors.
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