Author: ChandlerZ, Foresight News
In April 2025, the crypto market fell into turmoil once again. The Trump administration wielded the tariff stick again, causing a sudden change in global financial market sentiment. Bitcoin's price dropped over 10% in two days, and Ethereum even plummeted by 20% at one point, with liquidations reaching as high as $1.6 billion within 24 hours. Like several past historic crashes, this scene again triggered collective anxiety: 'Is this the end, or the beginning of a new collapse?'
However, if we look back at the history of the crypto market, we will find that this is not the first time everyone feels 'this is the end'. 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' triggered by the chain reaction of the FTX credit collapse, and now to this tariff crisis.
The market's script continues to repeat, yet investors' memories are always short.
This article will reconstruct the 'market scene' of the previous four historical crashes based on real data, comparing dimensions such as price drop, sentiment indicators, and macro background, attempting to extract a traceable and predictive pattern from these extreme moments: how does the crypto market withstand pressure when risks arise? How does it reshape its narrative time and again amidst systemic shocks?
Overview of historical crashes: a familiar script with different triggers
In the past five years, the crypto market has experienced at least four systemic crashes, each triggered by different backgrounds, yet all leading to severe price adjustments and chain-on/chain-off chain reactions.
From the data, '312' remains the most devastating incident in history, with BTC and ETH both dropping over 50% on that day. The total liquidation amount across the network reached as high as $2.93 billion, with over 100,000 people facing liquidations, and the largest single liquidation order valued at $58.32 million. This scale of liquidation indicates that market participants were generally using high leverage (such as 10 times or even higher), and when prices rapidly fell, the forced liquidation mechanism was triggered, further intensifying selling pressure and forming a vicious cycle.
At the same time, BitMEX's dramatic operation of 'pulling the plug' on trading exposed the fragility of market liquidity. Other trading platforms were also thrown into chaos, with Bitcoin cross-platform price differences reaching as high as $1,000, and arbitrage bots failing due to trading delays and API overloads. This liquidity crisis led to a rapid shrinkage of market depth, with buy orders almost disappearing and selling pressure completely dominating the situation.
BitMEX, as the platform with the largest short position at the time, effectively became the 'lifeline' that prevented Bitcoin's price from completely hitting zero. Had BitMEX not halted trading, its liquidity depletion could have caused prices to plummet close to zero, further triggering a chain collapse on other platforms.
Domino effect under a black swan event
'312' is not an isolated phenomenon within the crypto market, but rather a microcosm of the systemic crisis in the global financial system at the beginning of 2020.
Panic crash in the global stock market
Since the Nasdaq index hit an all-time high of 9,838 points on February 19, 2020, market sentiment plummeted as the COVID-19 pandemic spread globally. In March, the US stock market experienced a rare series of circuit breakers, triggering the circuit breaker mechanism three times on March 9, 12, and 16, with the S&P 500 index dropping 9.5% on March 12, the largest single-day drop since 'Black Monday' in 1987, and the VIX panic index soaring to an all-time high of 75.47. Meanwhile, the three major European stock indices (Germany, UK, France) and the Asia-Pacific markets (Nikkei, Hang Seng) simultaneously entered a technical bear market, with at least 10 countries' stock indices dropping over 20%.
The systemic sell-off in global capital markets rapidly spread to all risk assets, with crypto assets such as Bitcoin and Ethereum also experiencing indiscriminate sell-offs under this backdrop, leading to a sharp decline in market risk appetite and the formation of a 'financialization resonance' between cryptocurrencies and traditional assets.
Bloodbath in the commodity market
The traditional commodity market also collapsed in this crisis. On March 6, 2020, OPEC and Russia failed to reach an agreement on production cuts, and Saudi Arabia immediately launched a price war, announcing an increase in production and a reduction in oil prices, leading to a global energy market crash. On March 9, US crude oil (WTI) plummeted by 26%, the largest drop since the Gulf War in 1991; on March 18, WTI fell below $20. The uncontrollable crash of oil, the 'blood of the global economy', intensified investors' fears of a deep recession in the global economy.
In addition, commodities such as gold, copper, and silver also plummeted, indicating that 'traditional safe-haven assets' struggled to hedge against market downturns in the early stages of the crisis, and liquidity panic gradually escalated.
The dollar liquidity crisis and the paradox of safe-haven assets
Accompanied by a collective decline in global asset prices, the dollar liquidity crisis rapidly emerged. Investors scrambled to sell various assets for cash, driving the dollar index (DXY) sharply up from 94.5 to 103.0 in mid-March, reaching a three-year high. This 'cash is king' phenomenon caused indiscriminate sell-offs of all risk assets, with Bitcoin also not spared.
This is a crisis characterized by liquidity contraction, credit deconstruction, and emotional stampedes, where the boundaries between traditional and crypto markets are thoroughly blurred.
Policy hammer: China's crackdown storm in May 2021
In May 2021, the crypto market was hit hard. After reaching an all-time high of $64,000 in early May, Bitcoin's price halved to $30,000 within just three weeks, with a maximum drop of over 53%. This crash was not caused by on-chain systemic faults and was not directly impacted by macroeconomic cycles; its main cause was a series of high-pressure regulatory policies issued by the Chinese government.
On May 18, the Financial Stability Development Committee of the State Council of China explicitly stated that it would 'crack down on Bitcoin mining and trading activities'. The next day, multiple provinces successively implemented targeted mining regulation measures, including Inner Mongolia, Qinghai, and Sichuan, major computing power cluster regions. A large number of mining farms were forced to shut down, and computing power rapidly withdrew from the global network, causing Bitcoin's overall computing power to drop by nearly 50% within two months.
At the same time, the bank account interfaces of domestic trading platforms were subject to scrutiny, and OTC channels tightened, causing capital return pressure. Although mainstream exchanges have gradually exited the Chinese market since 2017, the 'high-pressure policy' still triggered risk-averse sentiment among global investors.
On-chain, the interval between miners' block creation significantly increased, with single block confirmation times soaring from 10 minutes to over 20 minutes, causing network congestion and soaring transaction fees. At the same time, market sentiment indicators plummeted, with the crypto fear and greed index entering the 'extreme fear' range, and investors' concerns about the continuous escalation of policies became the dominant force in the short term.
This round of crash represents the first time the crypto market has faced 'national-level suppression', leading to a process of rebuilding confidence. In the long run, the relocation of computing power has also unexpectedly pushed up the share of computing power in North America, marking a key turning point in the geographical landscape of Bitcoin mining.
Systemic chain collapse: Terra/Luna and the DeFi trust crisis
In May 2022, the algorithmic stablecoin UST of the Terra ecosystem depegged, triggering a 'Lehman moment' in the decentralized finance world. Bitcoin had already slowly declined from $40,000 at the beginning of the year to around $30,000, and as the UST mechanism failed, the price of Luna plummeted to below $0.0001 within days, causing a rapid imbalance in the DeFi ecosystem, with BTC's price further dropping to $17,000, and the entire adjustment period lasted until July, with a maximum drop of 58%.
UST was originally the largest algorithmic stablecoin by market cap in the crypto world, with its stability mechanism relying on Luna as the collateral asset. As the market began to question UST's stability, panic quickly spread. From May 9 to 12, UST continued to depeg, and Luna's price plummeted from $80 to below $0.0001 in just a few days, causing the entire ecosystem to collapse within five days.
Due to the Luna Foundation Guard previously using over $1 billion of Bitcoin reserves to support UST exchange rate stability, but ultimately failing to prevent the collapse, this part of BTC assets further exacerbated market pressure during the sell-off. Meanwhile, numerous DeFi projects in the Terra ecosystem (Anchor, Mirror) saw their on-chain TVL drop to zero, resulting in substantial user losses.
This collapse triggered a chain reaction: the large crypto hedge fund Three Arrows Capital (3AC) held substantial UST and Luna positions, and after the explosion, its funding chain broke; subsequently, several CeFi lending platforms such as Celsius, Voyager, and BlockFi also faced bank run turmoil, ultimately entering bankruptcy proceedings.
On-chain performance saw a sharp increase in ETH and BTC transaction volumes, as investors attempted to withdraw from all high-risk DeFi protocols, leading to a drastic decline in the depth of multiple on-chain liquidity pools and a spike in DEX slippage. The entire market entered a state of extreme panic, with the fear and greed index dropping to a near-record low.
This event was a 'global correction' of the internal trust model of the crypto ecosystem, shaking the viability expectations of 'algorithmic stablecoins' as the financial hub, while prompting regulators to redefine the risk scope of 'stablecoins'. Subsequently, stablecoins like USDC and DAI gradually emphasized collateral transparency and audit mechanisms, and market preferences clearly shifted from 'yield incentives' to 'collateral security'.
Collapse of trust: The off-chain credit crisis triggered by the FTX explosion
In November 2022, the centralized exchange FTX, hailed as the 'anchor of institutional trust', collapsed overnight, becoming one of the most impactful 'black swan' events in crypto history after Mt.Gox. This was a collapse of internal trust mechanisms, directly devastating the credit foundation of the entire crypto financial ecosystem.
The event began with a leaked Alameda balance sheet, revealing its large holdings of its own platform token FTT as collateral, sparking widespread doubts about asset quality and solvency in the market. On November 6, Binance CEO Changpeng Zhao publicly stated he would sell his FTT position, causing FTT's price to plummet and triggering a panic withdrawal from off-chain users. Within 48 hours, the FTX platform faced a bank run crisis and could not meet customer withdrawals, ultimately applying for bankruptcy protection.
The FTX explosion directly dragged down Bitcoin's price from $21,000 to $16,000, with a drop of over 23% within seven days; Ethereum fell from around $1,600 to below $1,100. Over $700 million worth of liquidations occurred within 24 hours, and although not as large as '312', the crisis occurred off-chain and affected multiple mainstream platforms, resulting in a loss of trust far exceeding what a single price crash could reflect.
On-chain, the exchange volumes of USDT and USDC surged, as users fled exchanges, transferring assets to self-custody wallets. The number of active addresses in cold wallets hit an all-time high, with 'Not your keys, not your coins' becoming the main theme on social platforms. Meanwhile, the DeFi ecosystem remained relatively stable during this crisis, with on-chain protocols like Aave, Compound, and MakerDAO not experiencing systemic risks under transparent liquidation mechanisms and sufficient asset collateral, reflecting the preliminary validation of the resilience of decentralized architectures.
More significantly, the collapse of FTX has prompted global regulators to re-examine the systemic risks in the crypto market. The SEC, CFTC, and financial regulators from various countries have initiated investigations and hearings, pushing compliance topics such as 'exchange transparency', 'proof of reserves', and 'off-chain asset audits' to become mainstream agendas.
This crisis is no longer just about 'price-level fluctuations', but a comprehensive handover of the 'trust baton'. It forces the crypto industry to return from superficial price optimism to fundamental risk control and transparent governance.
2025 tariff crisis ignites systemic external pressure
Unlike the internal crises in the crypto industry such as the FTX explosion, the recent market crash triggered by Trump’s imposition of 'minimum benchmark tariffs' once again replicated the global characteristics seen during '312'. It is not a collapse of a single platform or the loss of control of a single asset, but a systemic financial panic triggered by macro-level geopolitical conflicts, global trade structure changes, and monetary policy uncertainties.
On April 7, US stocks continued to open lower, with tech and chip stocks plummeting, Nvidia down over 7%, Tesla down nearly 7%, Apple down over 6%, and Amazon and AMD down over 5%, with Intel and ASML down over 3%. Blockchain concept stocks saw widespread declines, with Coinbase dropping about 9% and Canaan Creative also down about 9%.
Interestingly, after reports surfaced that Trump was considering a 90-day suspension of tariffs on certain countries, the S&P 500 index initially dropped over 4.7% before rising nearly 3.9%, the Dow Jones initially dropped over 4.4% before rising over 2.3%, and the Nasdaq initially dropped nearly 5.2% before rising over 4.5%, with BTC breaking through $81,000.
Subsequently, the White House told CNBC that any statements regarding the suspension of tariffs for 90 days were 'fake news', leading global capital markets to fall again. This underscores the pressure that Trump's tariff policy imposes on the global financial market.
Traversing multiple crashes: causes of risk, transmission paths, and market memory
From '312' to the 'tariff war', several significant crash events in the crypto market depict the different types of systemic pressures faced by this emerging asset class. These crashes not only reflect differences in 'magnitude of decline' but also illustrate the evolution trajectory of the crypto market across dimensions such as liquidity structure, credit models, macro coupling, and policy sensitivity.
The core difference lies in the 'hierarchical' change of risk sources.
The 2020 '312' and the 2025 tariff crisis are both crashes dominated by 'external systemic risks', driven by 'cash is king' sentiment, leading to collective sell-offs of assets on-chain and off-chain, representing the ultimate manifestation of the linkage in global financial markets.
The FTX and Terra/Luna events reflect the crisis of 'internal credit/mechanism collapse', exposing structural vulnerabilities under centralized and algorithmic systems; the Chinese policy crackdown is a concentrated manifestation of geopolitical pressure, demonstrating how the crypto network passively responds when facing sovereign-level powers.
Beyond these differences, there are also some notable commonalities:
First, the 'emotional leverage' of the crypto market is extremely high. Each price correction is quickly amplified through social media, leveraged markets, and on-chain panic behavior, forming a stampede.
Secondly, the risk transmission between on-chain and off-chain is becoming increasingly tight. From the FTX explosion to the 2025 whale on-chain liquidation, off-chain credit events are no longer limited to 'exchange issues', but will transmit to on-chain, and vice versa.
Third, the market's adaptability is increasing, but structural anxiety is also rising. DeFi demonstrated resilience during the FTX crisis, but revealed logical flaws during the Terra/Luna collapse; on-chain data is becoming increasingly public and transparent, but large liquidations and whale manipulation still frequently cause severe volatility.
Ultimately, each crash drives the 'maturation' of the crypto market; it is not more stable, but more complex. Higher leverage tools, smarter liquidation models, and more complex game roles mean that future crashes will not be fewer, but the way to understand them must be deeper.
It is worth noting that each crash has not ended the crypto market. On the contrary, it has driven deeper structural and institutional reconstruction. This does not imply that the market will become more stable; rather, increasing complexity often means that future crashes will not be fewer. But understanding the severe fluctuations in asset prices must be deeper, more systematic, and more compatible with the dual dimensions of 'cross-system shocks' and 'internal mechanism imbalances'.
What these crises teach us is not that 'the crypto market will ultimately fail', but that it must continually find its positioning between global financial order, decentralization ideals, and risk game mechanisms.