In April 2025, the crypto market once again plunged into chaos. The Trump administration reintroduced aggressive tariffs, triggering a sudden shift in global financial sentiment. Bitcoin dropped more than 10% in two days, while Ethereum plummeted as much as 20%, with $1.6 billion in liquidations within 24 hours. As with previous historic crashes, this scene reignited collective anxiety: “Is this the end, or the beginning of another collapse?”

But if we look back at the history of the crypto market, we’ll see that this isn’t the first time everyone thought, “It’s over this time.” In reality, every wave of extreme panic has been just another ripple in the unique curve of this asset class. From “312” to “519,” from the 2020 global financial panic to the FTX collapse and its chain reaction—the so-called “Crypto Lehman Moment”—and now, the tariff crisis.

The market script keeps repeating, yet investors’ memories are always short-lived.

This article will reconstruct the “market scene” of the past four historic crashes based on real data, comparing factors such as the scale of the drop, sentiment indicators, and macroeconomic conditions. It aims to extract a traceable pattern from these extreme moments to help understand and anticipate future events: How does the crypto market bear pressure when risks emerge? And how does it repeatedly reshape its narrative amid systemic shocks?

Overview Of Historic Crashes: A Familiar Script, Different Triggers

In the past five years, the crypto market has gone through at least four systemic crashes. While each was triggered by different circumstances, all led to sharp price corrections and chain reactions both on-chain and off-chain.

From the data, “312” remains the most brutal crash in history, with both BTC and ETH dropping over 50% in a single day. Total liquidations reached $2.93 billion, affecting more than 100,000 traders, and the largest single liquidation was worth $58.32 million. The scale of these liquidations showed that most market participants were using high leverage (10x or more), and as prices fell rapidly, forced liquidation mechanisms kicked in, further intensifying the sell-off and creating a vicious cycle.

At the same time, BitMEX’s dramatic move to “pull the plug” and pause trading exposed the fragility of market liquidity. Other exchanges also fell into chaos, with cross-platform Bitcoin price spreads reaching as high as $1,000. Arbitrage bots failed due to trading delays and API overloads. This liquidity crisis led to a rapid collapse in market depth—buy orders vanished, and selling pressure completely took over.

As the platform with the largest short open interest at the time, BitMEX’s trading halt actually became a “lifeline” that prevented Bitcoin’s price from collapsing to zero. Had BitMEX not paused trading, the exhaustion of order book depth might have caused prices to flash crash near zero, triggering a cascade of collapses across other platforms.

Domino Effect Under the Black Swan

“312” was not an isolated event within the crypto market—it was a microcosm of the broader systemic financial crisis that struck the global economy in early 2020.

Panic Crash in Global Stock Markets

After the Nasdaq hit a record high of 9,838 points on February 19, 2020, market sentiment turned sharply as the COVID-19 pandemic spread globally. Entering March, U.S. stocks saw rare circuit breakers triggered multiple times—on March 9, 12, and 16. On March 12 alone, the S&P 500 plunged 9.5%, marking its largest single-day drop since Black Monday in 1987. The VIX fear index soared to an all-time high of 75.47. Meanwhile, Europe’s major indices (Germany, UK, France) and Asia-Pacific markets (Nikkei, Hang Seng) simultaneously entered technical bear markets, with indices in at least 10 countries dropping more than 20%.

The systemic sell-off in global capital markets quickly spread to all risk assets. Crypto assets like Bitcoin and Ethereum were hit by indiscriminate selling. This shift in risk appetite marked the emergence of “financial resonance,” where crypto became increasingly correlated with traditional markets.

Massive Selloff in Commodity Markets

Traditional commodity markets also faced a complete collapse during the crisis. On March 6, 2020, OPEC and Russia failed to reach a production cut agreement, and Saudi Arabia immediately launched a price war, announcing increased production and price cuts, triggering a global energy market crash. On March 9, U.S. crude oil (WTI) plummeted 26%, the biggest drop since the 1991 Gulf War. By March 18, WTI had fallen below $20. The uncontrolled plunge in crude oil—“the lifeblood of the global economy”—intensified investor concerns about a deep global recession.

Additionally, gold, copper, silver, and other commodities also saw sharp declines, signaling that even “traditional safe-haven assets” failed to hedge against the market downturn in the early stages of the crisis, as liquidity panic gradually escalated.

U.S. Dollar Liquidity Crisis and the Paradox of Safe-Haven Assets

As global asset prices collectively fell, the U.S. dollar liquidity crisis quickly emerged. Investors rushed to sell all types of assets in exchange for U.S. dollar cash, pushing the U.S. Dollar Index (DXY) from 94.5 to 103.0 in mid-March, a three-year high. This “cash is king” phenomenon led to indiscriminate selling of all risk assets, and Bitcoin was not spared.

This was a crisis marked by liquidity contraction, credit disintegration, and emotional panic, which completely blurred the boundaries between traditional and crypto markets.

Policy Hammer: China’s Crackdown in May 2021

In May 2021, the crypto market suffered a heavy blow. After hitting a historic high of $64,000 in early May, Bitcoin’s price halved to $30,000 in just three weeks, marking a drop of more than 53%. This crash was not due to a systemic failure on the blockchain nor a direct impact from macroeconomic cycles. Instead, it was primarily caused by a series of high-pressure regulatory policies imposed by the Chinese government.

On May 18, the Chinese State Council’s Financial Stability and Development Committee explicitly stated its intention to “crack down on Bitcoin mining and trading activities.” The next day, several provinces began implementing targeted mining crackdowns, including Inner Mongolia, Qinghai, and Sichuan, which were major mining hubs. A large number of mining farms were forced to shut down, and mining power rapidly withdrew from the global network, causing Bitcoin’s overall network hash rate to drop nearly 50% in two months.

At the same time, bank account interfaces for domestic exchanges were inspected, and OTC channels were tightened, leading to capital outflow pressure. Although major exchanges had gradually withdrawn from the Chinese market since 2017, the “high-pressure policies” still triggered global investor risk aversion.

On the blockchain level, miner block intervals significantly increased, with block confirmation times rising from 10 minutes to over 20 minutes, causing network congestion and a surge in transaction fees. Market sentiment indicators plunged dramatically, with the crypto fear and greed index entering the “extreme fear” zone, and investor concerns about the continuous escalation of policies became the dominant force in the short term.

This crash marked the first time the crypto market faced a “national-level crackdown” and the confidence reshaping process that followed. In the long run, the migration of mining power unexpectedly led to an increase in the share of mining power in North America, marking a key turning point in the geographical shift of Bitcoin mining.

Systemic Chain Collapse: Terra/Luna and the DeFi Trust Crisis

In May 2022, the Terra ecosystem’s algorithmic stablecoin UST depegged, triggering a “Lehman moment” in the decentralized finance (DeFi) world. By then, Bitcoin had slowly fallen from its early-year price of $40,000 to around $30,000. As UST’s mechanism failed, Luna’s price plummeted to zero within a few days, and the DeFi ecosystem quickly became imbalanced. BTC’s price further crashed to $17,000, with the entire correction period lasting until July, reaching a maximum drop of 58%.

UST was the largest algorithmic stablecoin in the crypto world by market capitalization, with its stability mechanism relying on Luna as collateral. As doubts about UST’s ability to maintain its peg grew, panic spread rapidly. From May 9 to 12, UST continued to depeg, and Luna’s price fell from $80 to below $0.0001, collapsing the entire ecosystem within five days.

Previously, the Luna Foundation Guard had used over $1 billion worth of Bitcoin reserves to stabilize UST’s price, but it ultimately failed to prevent the collapse. These Bitcoin assets further added pressure to the market during the sell-off. Meanwhile, many DeFi projects in the Terra ecosystem (such as Anchor and Mirror) saw their on-chain Total Value Locked (TVL) plummet to zero, resulting in significant user losses.

This crash triggered a chain reaction: the large crypto hedge fund Three Arrows Capital (3AC) held significant positions in UST and Luna, and its fund chain broke after the collapse. Subsequently, CeFi lending platforms like Celsius, Voyager, and BlockFi faced liquidity crises, ultimately entering bankruptcy proceedings.

On-chain activity surged as ETH and BTC transaction volumes spiked, with investors rushing to exit high-risk DeFi protocols. This led to a sharp drop in liquidity pool depths and increased slippage on decentralized exchanges (DEX). The entire market entered an extreme state of panic, and the fear and greed index dropped to its lowest level in recent years.

This collapse marked a “global correction” of the trust model within the crypto ecosystem. It undermined the feasibility of algorithmic stablecoins as the financial backbone, pushing regulators to redefine the risk scope of stablecoins. In the aftermath, stablecoins like USDC and DAI began to emphasize collateral transparency and audit mechanisms, and market preferences shifted from “yield incentives” to “collateral security.”

Trust Collapse: The Off-Chain Credit Crisis Triggered by the FTX Meltdown

In November 2022, FTX, a centralized exchange hailed as the “institutional trust anchor,” collapsed overnight, becoming one of the most impactful “black swan” events in crypto history since Mt. Gox. This was a collapse of internal trust mechanisms that severely damaged the entire credit foundation of the crypto-financial ecosystem.

The event began with a leaked Alameda balance sheet, which revealed that it held a large amount of its own platform token, FTT, as collateral. This sparked widespread doubts about the quality of its assets and its ability to repay. On November 6, Binance CEO Changpeng Zhao publicly announced that he would sell his FTT position, causing the price of FTT to plummet and triggering a panic withdrawal wave among off-chain users. Within 48 hours, FTX faced a liquidity crisis, unable to repay client funds, and ultimately filed for bankruptcy protection.

The FTX collapse directly pulled down Bitcoin’s price, dropping from $21,000 to $16,000, a more than 23% decrease within seven days. Ethereum fell from around $1,600 to below $1,100. In just 24 hours, liquidations amounted to over $700 million. While not as large as the “312” crash, this crisis, occurring off-chain and impacting multiple mainstream platforms, resulted in a loss of trust far greater than what a price crash alone could reflect.

On-chain, the trading volume of USDT and USDC surged as users rushed to withdraw from exchanges and transfer assets to self-custody wallets. Cold wallet active addresses hit a record high, and “Not your keys, not your coins” became the rallying cry on social platforms. Meanwhile, the DeFi ecosystem remained relatively stable during the crisis. On-chain protocols like Aave, Compound, and MakerDAO, with transparent liquidation mechanisms and sufficient collateral, did not experience systemic risk, highlighting the initial validation of decentralized structures’ resilience under pressure.

Of even greater significance, the FTX collapse prompted global regulators to re-evaluate the systemic risks of the crypto market. The U.S. SEC, CFTC, and financial regulators from multiple countries initiated investigations and hearings, pushing topics such as “exchange transparency,” “reserve proof,” and “off-chain asset audits” to the forefront of the regulatory agenda.

This crisis was no longer just about “price volatility” but a comprehensive handover of the “trust baton.” It forced the crypto industry to move beyond superficial price optimism and return to fundamental risk control and transparent governance.

2025 Tariff Crisis Triggering Systemic External Pressure

Unlike internal crises in the crypto industry, such as the FTX collapse, the recent market crash triggered by Trump’s imposition of “minimum baseline tariffs” has once again reflected global characteristics similar to the “312” period. This was not caused by the collapse of a single platform or the loss of control over a particular asset, but by a systemic financial panic triggered by macro-level geopolitical conflicts, global trade structure changes, and uncertainties in monetary policy.

On April 7, U.S. stocks continued to open lower, with technology and chip stocks suffering heavy losses. Nvidia fell over 7%, Tesla dropped nearly 7%, Apple declined over 6%, and Amazon and AMD dropped more than 5%. Intel and ASML fell over 3%. Blockchain-related stocks also saw widespread declines, with Coinbase and Canaan Technology each falling by around 9%.

Interestingly, after rumors emerged that Trump was considering suspending tariffs on certain countries for 90 days, the S&P 500 index dropped over 4.7% at the opening but later rose nearly 3.9%. The Dow Jones dropped more than 4.4% at the open but then rebounded over 2.3%. The Nasdaq fell nearly 5.2% at the start but surged over 4.5%. Bitcoin also rose and broke through $81,000.

Subsequently, the White House told CNBC that any claims about suspending tariffs for 90 days were “fake news,” and global capital markets reversed their gains. This highlights the significant pressure that the Trump administration’s tariff policies exert on the global financial market.

Crossing Multiple Collapses: Causes of Risk, Transmission Paths, and Market Memory

From “312” to the “Tariff War,” several major crashes in the cryptocurrency market have each depicted different types of systemic pressure faced by this emerging asset class. These collapses are not just about the “extent of the decline,” but also reflect the evolutionary trajectory of the cryptocurrency market across dimensions like liquidity structure, credit models, macro coupling, and policy sensitivity.

The core difference lies in the “hierarchical” changes of risk sources.

The “312” crash in 2020 and the tariff crisis in 2025 both belong to collapses dominated by “external systemic risks,” with markets driven by a “cash is king” sentiment, leading to a collective sell-off of both on-chain and off-chain assets. This is an extreme manifestation of the interconnection of global financial markets.

The FTX and Terra/Luna events, on the other hand, represent crises caused by “internal credit/mechanism collapse,” exposing the structural vulnerabilities of centralized and algorithmic systems. China’s policy crackdown is a concentrated expression of geopolitical pressure, showing how the cryptocurrency network passively responds to sovereign-level forces.

Aside from these differences, there are several commonalities worth noting:

First, the “emotional leverage” in the cryptocurrency market is extremely high. Every price correction quickly amplifies through social media, leveraged markets, and on-chain panic behaviors, creating a stampede effect.

Second, the transmission of risks between on-chain and off-chain markets has become increasingly tight. From the FTX collapse to the 2025 whale on-chain liquidation, off-chain credit events are no longer limited to “exchange problems,” but will transmit to the chain, and vice versa.

Third, while market adaptability is increasing, structural anxiety is also growing. DeFi showed resilience during the FTX crisis, but exposed logical flaws during the Terra/Luna collapse. On-chain data is becoming more transparent, yet large-scale liquidations and whale manipulation still frequently trigger violent fluctuations.

Lastly, each collapse pushes the cryptocurrency market toward “maturity.” This does not mean it will become more stable, but rather more complex. Higher leverage tools, smarter liquidation models, and more complex game roles mean that future crashes will not be fewer, but the way we understand them must be deeper.

It is worth noting that each collapse has not ended the cryptocurrency market. On the contrary, it has driven deeper structural and institutional reconstruction within the market. This does not imply that the market will become more stable. In fact, increased complexity often means that future crashes will not be fewer. However, understanding the sharp price fluctuations of these assets requires a deeper, more systematic approach, compatible with both “cross-system shocks” and “internal mechanism imbalances.”

What these crises tell us is not that “the cryptocurrency market will eventually fail,” but that it must continuously find its position in the intersection of global financial order, decentralization philosophy, and risk game mechanisms.

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