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Five Bitcoin Crashes and What You Can Learn From Them

With Bitcoin price reaching a new high of $5,000 recently, and then dumping back down to nearly $3,000, it’s been a wild ride this month.

These crashes are part and parcel of the volatile digital currency, and drops of 10, 20, even 40 percent are not that uncommon.

Since Bitcoin began, there have been some major crashes, but there have also been some good lessons to learn.

April 2013’s meltdown

In one of the earlier and larger drops, Bitcoin price went from $233 to $67 overnight, a massive 71 percent drop in 12 hours. It would take seven months to recover.

This meltdown was attributed to Bitcoin rubbing shoulders with the mainstream for the first time. The digital currency had never crossed $15 before 2013 but a flood of media coverage helped drive it well above $200.

This was a drastic and violent correction that followed the exuberant price rise, although, there was also an outage at Mt. Gox which was said to be a catalyzing factor.

The fammed 2013 bubble

After April, Bitcoin price hovered around $120 until later in the year when prices suddenly skyrocketed to a high of $1,150 in late November. However, by mid-December, the price had tumbled back down to less than half of that, and that’s where it would stay for four years before crossing $1,000 again.

The late 2013 crash had all the signs of a bubble, as amateur investors rushed the digital currency. It was further perpetuated as regulators took a positive stance on it, while exchanges such as Coinbase had started making the buying process far easier.

The Mt. Gox misfortune

Adding to the long road to recovery after the collapse in December 2013 was the Mt. Gox calamity that nearly sunk the whole Bitcoin boat. Bitcoin was steadily growing through January and February when it suddenly fell nearly 50 percent from $867 to $439.

This collapse was triggered when Mt. Gox announced that it had had a major hack. On Feb. 7, the exchange halte...

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