Original author: ChandlerZ, Foresight News
In April 2025, the crypto market was once again in a bloodbath. The Trump administration once again used the tariff stick, and the sentiment of the global financial market changed suddenly. Bitcoin fell by more than 10% in two days, and Ethereum plunged by 20% at one point. The amount of liquidation in 24 hours reached 1.6 billion US dollars. Like several historic plunges in the past, this scene once again caused 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 that this time its 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 FTXs credit collapse, to this tariff crisis.
The markets script repeats itself over and over again, but investors memories are always short.
Based on real data, this article will reconstruct the market scene of the previous four historical plunges, compare the decline, sentiment indicators and macro background, and try to extract a regular clue for retrospection and prediction from these extreme moments: When risks come, how does the crypto market withstand pressure? How does it reshape its own narrative again and again in the system shock?
Overview of historical plunges: Familiar script, different triggers
In the past five years, the crypto market has experienced at least four systemic crashes. Although the triggering backgrounds of each were different, they all triggered drastic price adjustments and on-chain/off-chain chain reactions.
Judging from the data, 312 is still the worst in history, with BTC and ETH falling by more than 50% on the same day. At that time, the total amount of liquidation in the entire network was as high as 2.93 billion US dollars, more than 100,000 people suffered liquidation, and the largest single liquidation order was worth 58.32 million US dollars. This scale of liquidation shows that market participants generally used high leverage (such as 10 times or even higher) at that time. When the price fell rapidly, the forced liquidation mechanism was triggered, further exacerbating the selling pressure and forming a vicious circle.
At the same time, BitMEXs dramatic operation of pulling the plug to suspend trading exposed the fragility of market liquidity. Other trading platforms were also in chaos at the time, with the cross-platform spread of Bitcoin reaching as high as $1,000, and arbitrage robots failing due to trading delays and API overload. This liquidity crisis caused the market depth to shrink rapidly, buy orders almost disappeared, and selling pressure completely dominated the situation.
As the platform with the largest short position at the time, BitMEX’s trading suspension actually became a “lifeline” for Bitcoin’s price to not completely return to zero. If BitMEX had not interrupted trading, its deep exhaustion might have caused the price to drop to near zero in an instant, further triggering a chain reaction of collapses on other platforms.
The domino effect of black swan
312 is not a phenomenon isolated to the crypto market, but a microcosm of the global financial systemic crisis in early 2020.
Panic crash in global stock markets
Since the Nasdaq index hit a record high of 9,838 points on February 19, 2020, market sentiment has taken a sharp turn for the worse as the COVID-19 pandemic spreads around the world. In March, the U.S. stock market experienced rare circuit breakers in succession, with the circuit breaker mechanism triggered three times on March 9, 12, and 16. On March 12, the SP 500 index fell by 9.5%, the largest single-day drop since Black Monday in 1987, and the VIX panic index soared to a record high of 75.47. At the same time, the three major European stock indices (Germany, Britain, and France) and the Asia-Pacific market (Nikkei, Hang Seng Index) simultaneously entered a technical bear market, with at least 10 countries stock indices falling by more than 20%.
The systemic sell-off in the global capital market quickly spread to all risky assets. Crypto assets such as Bitcoin and Ethereum also suffered indiscriminate sell-offs in this context. The market risk appetite plummeted, and a financial resonance was formed in which cryptocurrencies and traditional assets were highly synchronized.
Bloodbath in commodities markets
Traditional commodity markets also suffered a complete collapse in this crisis. On March 6, 2020, OPEC and Russia failed to reach an agreement on production cuts. Saudi Arabia immediately launched a price war, announced an increase in production and lowered the price of crude oil, triggering a plunge in the global energy market. On March 9, U.S. crude oil (WTI) plummeted 26%, the largest drop since the Gulf War in 1991; on March 18, WTI fell below $20. The uncontrolled plunge in crude oil, the blood of the global economy, has exacerbated investors concerns that the global economy is in a deep recession.
In addition, commodities such as gold, copper, and silver also plummeted simultaneously, indicating that traditional safe-haven assets were also unable to hedge against market downturns in the early stages of the crisis, and liquidity panic gradually escalated.
The paradox of the US dollar liquidity crisis and safe-haven assets
As global asset prices fell collectively, the US dollar liquidity crisis quickly emerged. Investors rushed to sell off various assets in exchange for US dollar cash, pushing the US dollar index (DXY) up sharply from 94.5 to 103.0 in mid-March, hitting a three-year high. This cash is king phenomenon caused all risky assets to be sold indiscriminately, and Bitcoin was not immune.
This is a crisis of liquidity contraction, credit deconstruction and emotional stampede. The boundary between traditional and crypto markets has been completely broken down at this moment.
Policy 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 the maximum drop exceeding 53%. This plunge was not caused by a systemic failure on the chain, nor was it directly impacted by the macroeconomic cycle. The main reason was a series of high-pressure regulatory policies successively introduced by the Chinese government.
On May 18, the Financial Stability and Development Committee of the State Council of China explicitly stated that it would crack down on Bitcoin mining and trading activities. The next day, several provinces successively introduced targeted mining rectification measures, including Inner Mongolia, Qinghai, Sichuan and other major computing power cluster areas. A large number of mining farms were forced to shut down, and computing power was quickly withdrawn from the global network, causing the total Bitcoin network computing power to drop by nearly 50% in two months.
At the same time, the bank account interfaces of domestic trading platforms were investigated, and the OTC channels were tightened, causing pressure for capital to flow back. Although mainstream exchanges have gradually withdrawn from the Chinese market since 2017, the high pressure policy still triggered risk aversion among global investors.
On the chain, the interval between miners’ block generation has increased significantly, and the confirmation time of a single block has soared from 10 minutes to more than 20 minutes. Network congestion has caused a surge in transfer fees. At the same time, market sentiment indicators have dropped precipitously, and the crypto panic and greed index has entered the extreme panic range. Investors concerns about the continued escalation of policies have become the dominant force in the short term.
This round of plunge is the first time that the crypto market has faced the process of rebuilding confidence caused by national-level suppression. In the long run, the outflow of computing power has unexpectedly promoted the increase of computing power share in North America, becoming a key turning point in the transformation of the geographical pattern of Bitcoin mining.
Systemic cascading collapse: Terra/Luna and the DeFi trust crisis
In May 2022, the Terra ecosystem’s algorithmic stablecoin UST decoupled, 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, the price of Luna returned to zero within a few days, the DeFi ecosystem quickly became unbalanced, and the price of BTC further plummeted to $17,000. The entire adjustment period lasted until July, with the maximum drop of 58%.
UST was originally the algorithmic stablecoin with the largest market value in the crypto world, and its stabilization mechanism relied on Luna as a collateral asset for minting. When the market began to question USTs stability, panic spread quickly. From May 9 to 12, UST continued to decouple, and the price of Luna plummeted from $80 to below $0.0001, and the entire ecosystem collapsed within five days.
Since Luna Foundation Guard previously used more than $1 billion of Bitcoin reserves to support the stability of the UST exchange rate, but ultimately failed to prevent the collapse, this part of BTC assets further exacerbated the market pressure during the market sell-off. At the same time, the on-chain TVL of many DeFi projects (Anchor, Mirror) in the Terra ecosystem returned to zero, and users suffered heavy losses in funds.
This collapse triggered a chain reaction: the large crypto hedge fund Three Arrows Capital (3AC) held a large number of UST and Luna-related positions, and its capital chain was broken after the crash; subsequently, several CeFi lending platforms such as Celsius, Voyager, and BlockFi also experienced bank runs and eventually entered bankruptcy proceedings.
In terms of on-chain performance, the transfer volume of ETH and BTC increased sharply, and investors tried to withdraw from all high-risk DeFi protocols, causing the depth of multiple on-chain liquidity pools to drop sharply and DEX slippage to soar. The entire market entered an extreme panic state, and the panic and greed index fell to the lowest value in recent years.
This is a global correction of the trust model within the crypto ecosystem, which has shaken the feasibility of algorithmic stablecoins as a financial hub, and has pushed regulators to redefine the risk scope of stablecoins. Since then, stablecoins such as USDC and DAI have gradually emphasized the transparency of collateral and the audit mechanism, and market preferences have also clearly shifted from income incentives to collateral security.
Trust collapse: FTX crash triggers off-chain credit crisis
In November 2022, FTX, a centralized exchange known as the institutional trust anchor, collapsed overnight, becoming one of the most impactful black swan events in the history of cryptocurrencies after Mt. Gox. This was a collapse of the internal trust mechanism, which directly hit the credit foundation of the entire crypto-financial ecosystem.
The incident started with a leaked Alameda balance sheet, which revealed that it held a large amount of its own platform currency FTT as collateral assets, triggering widespread market doubts about asset quality and solvency. On November 6, Binance CEO Zhao Changpeng publicly stated that he would sell his FTT positions, and the FTT price quickly plunged, triggering a panic withdrawal wave of off-chain users. In less than 48 hours, the FTX platform fell into a run crisis, unable to repay customer funds, and eventually filed for bankruptcy protection.
The FTX crash directly pulled down the price of Bitcoin, from $21,000 to $16,000, a drop of more than 23% in seven days; Ethereum fell from around $1,600 to below $1,100. The amount of liquidation exceeded $700 million within 24 hours. Although not as large as the 3.12 crisis, the loss of trust far exceeded the appearance that a single price plunge can reflect because the crisis occurred off-chain and affected many mainstream platforms.
On the chain level, the exchange volume of USDT and USDC has increased sharply, and users have withdrawn from exchanges and transferred their assets to self-custodial wallets. The number of active addresses in cold wallets has reached 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 has been relatively stable during this crisis. On-chain protocols such as Aave, Compound, and MakerDAO have not incurred systemic risks under the premise of transparent liquidation mechanisms and sufficient asset collateral, reflecting the initial verification of the decentralized architectures ability to withstand pressure.
More far-reachingly, the collapse of FTX has triggered a re-examination of systemic risks in the crypto market by global regulators. The US SEC, CFTC, and financial regulators in many countries have launched investigations and hearings, pushing compliance issues such as exchange transparency, proof of reserves, and off-chain asset audits to become mainstream agendas.
This crisis is no longer a fluctuation at the price level, but a comprehensive handover of the scepter of trust. It forces the crypto industry to return to basic risk control and transparent governance from superficial price optimism.
2025 Tariff crisis triggers systemic external pressure
Unlike the internal crises in the crypto industry such as the FTX crash, the recent market crash caused by Trumps imposition of minimum benchmark tariffs has once again reproduced the global characteristics of the 3.12 period. It is not the collapse of a platform or the loss of control of an asset, but a systemic financial panic triggered by macro-level geopolitical conflicts, drastic changes in the global trade structure and monetary policy uncertainty.
On April 7, the U.S. stock market continued to open lower, with U.S. technology stocks and chip stocks plummeting. Nvidia fell more than 7%, Tesla fell nearly 7%, Apple fell more than 6%, Amazon and AMD fell more than 5%, Intel and ASML fell more than 3%. Blockchain concept stocks fell across the board, with Coinbase falling about 9% and Canaan Technology falling about 9%.
Interestingly, after the market reported that Trump is considering suspending tariffs on some countries for 90 days, the SP 500 index 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 above $81,000.
Later, the White House told CNBC that any talk of a 90-day suspension of tariffs was fake news, and global capital markets fell again. This is enough to show the pressure that the Trump administrations tariff policy has on global financial markets.
Crossing multiple crashes: Risk causes, transmission paths and market memory
From the March 12 Incident to the tariff war, several major crashes in the crypto market have portrayed different types of systemic pressures faced by this emerging asset class. These crashes are not just differences in declines, but also reflect the evolution of the crypto market in terms of liquidity structure, credit model, macro coupling, policy sensitivity and other dimensions.
The core difference lies in the change in the level of risk sources.
The 312 crisis in 2020 and the tariff crisis in 2025 are both collapses driven by external systemic risks. The market is driven by the cash is king sentiment, resulting in a collective sell-off of on-chain and off-chain assets, which is an extreme presentation of the linkage of global financial markets.
The FTX and Terra/Luna incidents reflect the crisis of internal credit/mechanism collapse, exposing the structural fragility of centralized and algorithmic systems; Chinas policy suppression is a concentrated manifestation of geopolitical pressure, showing how encrypted networks passively respond when faced with sovereign-level forces.
Despite these differences, there are some commonalities worth noting:
First, the emotional leverage of the crypto market is extremely high. Every price correction will be quickly amplified through social media, leveraged markets, and on-chain panic behavior, resulting in a stampede.
Second, the risk transmission between on-chain and off-chain is becoming increasingly close. From the FTX crash to the whale chain liquidation in 2025, off-chain credit events are no longer limited to exchange problems but will be transmitted to the chain, and vice versa.
Third, the markets adaptability is increasing, but structural anxiety is also increasing. DeFi showed resilience in the FTX crisis, but exposed logical loopholes in the Terra/Luna collapse; on-chain data is becoming more open and transparent, but large liquidations and whale operations still often cause violent fluctuations.
Finally, every crash pushes the crypto market to maturity, not more stability, but more complexity. Higher leverage tools, smarter liquidation models, and more complex gaming roles mean that there will be no fewer crashes in the future, but the way to understand it must be deeper.
It is worth noting that every crash did not end the crypto market. On the contrary, it promoted a deeper reconstruction of the market at the structural and institutional levels. This does not mean that the market will become more stable. On the contrary, increased complexity often means that there will be no fewer crashes in the future. However, the way to understand the drastic fluctuations in the prices of such assets must be deeper, more systematic, and more compatible with the dual dimensions of cross-system shocks and internal mechanism imbalances.
What these crises tell us is not that the crypto market will eventually fail, but that it must constantly find ways to position itself between the global financial order, the concept of decentralization and the risk game mechanism.
