Black anniversary: when the crypto world held its breath
Older students may remember: A year ago, the financial markets and with them the entire crypto market were upside down. Today, not much reminds us of that bloodbath. As a reminder of the fragility of the crypto market, however, Black Thursday has burned itself into memory.
The crypto market has been in a frenzy for months. There is hardly a coin that is not printing black figures these days. Bitcoin’s performance is unrivalled by traditional asset classes, the Ethereum blockchain is Bitcoin Storm bursting at the seams, DeFi has become socially acceptable and even supposedly fun currencies like Dogecoin are enjoying brisk demand. The market is once again in a gold-rush mood. This was not always the case. When the World Health Organisation declared the coronavirus a global pandemic a year ago, the crypto market experienced the biggest crash in its history. On 12 March, which was to go down in crypto annals as Black Thursday, nothing remained as it was before.
Super-GAU on the crypto market
When it became clear a year ago that Covid-19 was not a flash in the pan and would paralyse public life in all parts of the world indefinitely, the financial markets went into crisis mode overnight. The panic immediately spilled over into the crypto market. Investors quickly liquidated their positions to get their hands on the No. 1 crisis currency: Cash.
The crash reached its sad climax exactly one year ago on 12 March, when a downward spiral was set in motion that almost completely bled the market dry in no time. Under the pressure of a massive sell-off, the total market capitalisation plummeted to 135 billion US dollars – almost 70 billion US dollars less than today’s Ethereum market capitalisation. The bitcoin price – still chasing the supposedly impregnable 10,000 mark shortly before – rushed down with it, losing 35 percent of its value in just one day. On some exchanges, such as Coinbase, the cryptocurrency was even traded below 4,000 US dollars. The situation was no better for the altcoins. Ethereum fell to 110 US dollars, XRP saved itself just above the 10-cent mark with 0.13 USD, as did IOTA with a low of 0.11 US dollars, while Litecoin only found a foothold just above 30 US dollars. The market was in danger of a repeat of the tough crypto winter of 2018.
Phoenix from the ashes
A year later, the chart pictures could hardly have changed more. Bitcoin has since made up 620 per cent, Ethereum even almost 800 per cent. IOTA and Litecoin have also moved into the fast lane with annual gains of 590 and 300 percent, respectively, while XRP still posted an increase in value of 115 percent despite SEC squabbles. There is no sign of a crisis; at over 1.75 trillion US dollars, the total crypto market capitalisation is at a record level.