A Review of Major Events in the Crypto World: From Mt. Gox to the FTX Collapse

Cryptocurrency investors who have experienced multiple major events can be considered veterans of the industry. Let's review a few significant events over the years to remind ourselves to invest cautiously.

Mt. Gox Incident

In February 2014, Mt. Gox, then the world's largest Bitcoin exchange, was hacked, resulting in a loss of approximately 850,000 Bitcoins, accounting for 7% of the total Bitcoin supply at that time. This event led to an 80% plunge in Bitcoin prices and triggered a crisis of trust in the market.

Interestingly, due to the surge in Bitcoin prices in recent years, the remaining Bitcoin assets after the Mt. Gox liquidation are now sufficient to cover all the losses of the original creditors. Recently, it has been reported that Mt. Gox is preparing to distribute approximately 142,000 Bitcoins and 143,000 Bitcoins in cash to creditors, with a total value of over $9 billion.

94 Incident

In 2017, with the booming cryptocurrency market, various ICO projects emerged like mushrooms after rain. Regulatory authorities discovered that a large number of ICO projects had suspicions of illegal fundraising and fraud.

On September 4, 2017, seven ministries jointly issued a notice, classifying ICOs as illegal fundraising activities. This policy led to a 32% drop in Bitcoin prices, while Litecoin plummeted by 57.3%. Many exchanges were forced to move overseas, and project teams hurried to refund coins.

However, after a brief impact, the price of Bitcoin quickly rebounded and reached a historical high of $20,000 at the end of 2017. Some exchanges returned through coin-to-coin trading and over-the-counter fiat trading, such as a certain trading platform that took the opportunity to rise.

312 Incident

On March 12, 2020, affected by the global pandemic, the price of Bitcoin plummeted from $7,966 to $3,782, with a decline of over 50% in two days. At that time, many investors viewed Bitcoin as a safe-haven asset, but a consensus in the market had yet to be formed.

It is worth noting that investors who bought at this low point achieved more than 20 times return in the following year.

519 Incident

On May 18, 2021, financial regulatory authorities once again voiced concerns, warning about the risks of virtual currency trading. On May 19, Bitcoin fell from $44,000 to $29,000, a decrease of 34%.

In the following period, negative news such as mining farms shutting down and mining machines going overseas continued. Many investors believed that the bull market had ended. However, shortly after, the price of Bitcoin rebounded again and reached a new high of $67,000 by the end of the year.

LUNA/FTX Explosion Incident

In 2022, the successive collapses of LUNA and FTX dealt a heavy blow to the crypto world market. The failure of LUNA's algorithmic stablecoin model caused its price to nearly drop to zero. Meanwhile, the internal management issues and fund misappropriation at FTX, then the second largest exchange by market capitalization, were shocking.

These two events severely undermined investor confidence, causing the price of Bitcoin to drop from $60,000 at the beginning of the year to $15,000 by the end of the year, a decline of 75%.

Summary and Insights

Looking back at these significant events, we can find:

1. Real events related to cryptocurrency technology (, such as the theft of Mt. Gox and the collapse of LUNA/FTX ), often have a long-term impact on the market, requiring 1-2 years to recover.

2. The crash caused by policy factors (, like the events of 94 and 519, ) usually gets repaired within a few months.

3. External factors (, such as the 312 incident ), have a relatively short-term impact on the market.

For investors, it is crucial to pay attention to the development of crypto technology itself and the potential risks involved. Market fluctuations caused by policies or external factors may provide opportunities to buy at the bottom, but issues on the technical level often take longer to restore market confidence.

As the application scenarios of cryptocurrencies continue to expand, the future development potential of the industry is enormous. However, investors must also remain vigilant, as improper behavior within the industry could severely damage the development of the entire ecosystem. Maintaining rationality and caution, while focusing on technological advancements, is essential for steadily progressing in this market filled with opportunities and challenges.