At time of writing, Bitcoin is at $78,849, down 28% from its all time high of $109,500– a run-of-the-mill bull market pullback if you’ve been around long enough! However, the crash coincides with a broader rout across domestic and international markets, which is making even veterans a bit anxious.

Let’s compare the last few major panics with the current “Tariff Turmoil” crash.

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The COVID Crash (March 2020)

This is the crash likely most analogous to today. Fear and panic swept across all markets and no asset was safe. As COVID cases ramped up in the US, a previously unconcerned America reversed course in mid-March, seizing up supply chains and markets in the process.

At the time, bitcoin and crypto behaved as risk-on assets, so when the entire world economy began to shudder, crypto was the first to drop. Bitcoin dropped from $9,170 on March 9 to a low of $3,880 three days later on March 13, earning March 12 the name Black Thursday. The crash saw a 58% Bitcoin pullback, and BitMex experienced an “outage” which arguably prevented bitcoin from going even lower by allowing the market structure to recover and market makers to re-align their positions.

What happened in the following 2 months was a full V-shaped recovery. By July, Bitcoin was back where it started and would go on to $64,000 just 12 months later.

The Terra/Luna stablecoin panic (May 2022)

Several months into the last bear market, the first real shoe dropped as the algorithmic stablecoin Terra collapsed, erasing billions from the market and wiping out leverage everywhere. 

As the stablecoin depegged, over 80,000 BTC was liquidated to defend the peg. Roughly $3.5 billion of BTC sell pressure hit the market alongside broader contagion concerns.

Over the course of May 5, 2022 to May 12, 2022, Bitcoin declined about 35% in under one week, from $39.4k to $25.3k. This fallout came 6 months into the 2022 bear market after bitcoin peaked  at $69,600 in November 2021.

Terra/Luna kicked off the series of events that defined last cycle’s bear market, the 3AC collapse, DCG & Genesis, and finally…FTX.

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FTX fallout (November 2022)

After a brutal and unrelenting bear market, the second shoe dropped: FTX insolvency. While it didn’t have as dramatic an impact on price, it did mark an absolute bottom in both sentiment and price and is thus burned into our minds.

The BTC drawdown was relatively moderate – from $21.2k to $15.8k or 25% over the course of the first week in February.

While the fall of 2022 did see broader markets also bottom, crypto definitely fared the worst.

Subjectively, the post-FTX vibe was the worst I have ever seen in my career. There were serious questions regarding whether bitcoin and crypto had a future in America or whether it would have to find a place outside more regulated Western markets. 

“It’s different this time”…is it?

In my opinion, the COVID crash is the most analogous to today. Other extreme drawdowns in recent memory – namely, the Terra/Luna panic and the FTX fallout – were endogenous to crypto, while right now, bitcoin is getting battered by a maelstrom of macro forces. 

This might give you some hope if you think the market could recover similarly, particularly if the Federal Reserve lowers rates this year and so lubricates markets with fresh liquidity. It is important to remember sentiment alongside price action. Compared to other pullbacks, the current “bitcoin bear” price action has been pretty standard. However, sentiment does feel pretty abysmal right now.

Keep your head up though: Bitcoin is still a $1.5 trillion dollar asset.

Yes, this newsletter may come across as cope. So here’s the past 12 months of bitcoin price action in calming a Studio Ghibli format. Perhaps AI can help us after all.

Tweet of the week

Laughter is the best medicine, I’m told, so the doctor has ordered a dose of chuckles to assuage the pain from your hemorrhaging portfolio.

See you in Tysons, VA for OPNEXT! If you can’t make it, check out our livestream on X, YouTube or elsewhere.

-CMH & CBS