Is this crypto sell-off the worst one?
On Feb. 3, the crypto market faced a severe downfall, with over $2.3 billion in leveraged crypto positions being liquidated within 24 hours. One of the alternative estimations points out $8 to $10 billion in crypto liquidation. Is this downfall a record-breaking?
Many crypto influencers call the Feb. 3 crypto crash the worst in history, calling it worse than the FTX and Terra Luna collapse or even saying it is more severe than the COVID-related plunge that saw Bitcoin losing over 50% of its value in a single day.
Which crypto collapse actually was the worst?
The takes on which of the crashes is the worst one may vary depending on the methodology used. Looking at the BTC price drop, we may conclude that losing over 50% in a single day is way worse than a 13% drop that occurred on Feb. 3, 2025. Some experts believe that the volume of liquidated leveraged crypto assets was higher in the February 2025 downfall than the one in 2020. However, we don’t have enough reliable data to see if it’s true.
The crises of 2022 related to Terra Luna stablecoin collapse and the FTX exchange shutdown were more severe in terms of liquidations than the 2020 one, although they didn’t see BTC price shrinking in two within 24 hours.
Although many news outlets claim that the recent downfall resulted in over $2 billion in leveraged crypto liquidation, Bybit CEO Ben Zhou said on X that ByBit solely saw $2.1 billion in liquidations. Zhou estimated the overall market liquidations to be $8 to $10 billion. If he’s right, then the total liquidated amount may be larger than the combined COVID, Terra Luna, and FTX shutdown liquidations.
As for the earlier Bitcoin price crashes, there were smashing downfalls in 2011, 2013, and 2017; however, the relative lack of reliable data about those market crashes makes it impossible to adequately compare those shakeups to those that took place in the 2020s.
In the first half of 2011, the BTC price went from $2 to $32. In June, when the price dropped below $20 following the hack of the biggest crypto exchange at the time, Mt. Gox, the price plummeted to $0.01.Â
Some consider it the worst downfall of the BTC price. Although the price dropped significantly, there was no collateralized BTC trading, which helped avoid serious losses. However, Mt. Gox users’ funds were affected. In one year, the price reached over $10 and fully recovered by 2013.
Crypto maxis stay cool
Despite the market bloodbath, seasoned crypto enthusiasts and professionals signal that this downfall doesn’t mean the collapse of the market. Especially given that various markets are in decline.
Interestingly enough, as of the time of writing this article, the BTC price approximated $100k again, accumulating around $9,000 after the bottom mark, effectively recovering over half of what has been lost.
The Rich Dad Poor Dad author Robert Kiyosaki called the crash brutal. However, he reminded us that the best assets in the world (gold, silver, real estate, Bitcoin, stocks, and bonds) are going on sale, and it’s the best time to get rich.
Traders who used leverage to amplify their profits suffered the most. The long-term hodlers realize that the BTC price will recover, as it did after the previous brutal crashes. The momentum that led to a 2021 crypto boom started to build up right after the Mar. 13 2020, market collapse, demonstrating that in turbulent times, many people see crypto as a safe haven. In less than two months, the BTC price approached the value it had before the March sell-off.
Following the FTX shutdown, BTC lost around a fourth of its value in a matter of a couple of days. After a short period of uncertainty, the price began to build up again, fully recovering in two and a half months and doubling in 13 months after the downfall. The Terra Luna stablecoin collapse in May triggered a longer BTC price decline. It took Bitcoin over 8 months to fully recover.
The Binane CEO Richard Teng took to X to remind the community that this catastrophic sell-off is not the first and will not be the last, noting that the overall BTC trajectory is ascending, disregarding periodical sharp declines. Teng faced backlash, though. Several X users criticized Binance for listing worthless meme coins, and the exchange was called a part of the problem. However, the implications of the meme coin craze are another topic. The ‘this too shall pass’ sentiment (the words posted by Teng) is the current mainstream of the crypto community.
