The 2022 drop was a “textbook” crash for Bitcoin. It was widely expected after the 2021 bull run.
It all actually started as early as mid-November 2021, when its upward momentum was exhausted after touching an all-time high at $69,000 on the 10th of that month.
The first drop merely brought the price back below $56,000 eight days after the ATH, that is, to mid-October levels, so it worried virtually no one. However, from November 2020 to November 2021 the price had risen 360%, so many expected at least a retracement. It is worth noting that by mid-November 2020 the price had risen to $19,000, which is roughly the current level.
From 18 November 2021 until the beginning of the following month, the price remained above $55,000, but at that point it made another sudden descent to below $43,000, then rebounded to around $50,000.
That sharp and rapid descent made it clear that the bull run was probably over, but there were still few who assumed a further collapse like the one that then actually happened in 2022.
It is worth mentioning that after all three halvings occurred in Bitcoin’s history (2012, 2016 and 2020) there was one year of strong growth, the following one, which led the price to record new all-time highs: $1,100 in 2013, almost $20,000 in 2017 and almost $70,000 in 2021. In all cases the following year there was a collapse.
After ending 2021 at $50,000, the next collapse occurred in January 2022, with two sharp drops. The first, at the beginning of the month, brought it down to $40,000, then after a brief rebound there was another at the end of the month that brought it down to below $33,000 for a brief moment.
At that point, it was not only clear that the bull run was over, but also that a speculative bubble had inflated in 2021 that burst between December and January of the following year.
Many believed that the price would continue to fall, and instead it recovered by climbing back up to around $45,000 in mid-February. Thereafter, in part and mainly because of sharp declines in global financial markets due to the outbreak of war in Ukraine, the price fluctuated between $45,000 and $38,000 until early May.
May and June were the most difficult months of 2022, because in addition to the very bad financial situation in global financial markets due to war, inflation, recession fears, and especially tight monetary policies, a couple of big tsunamis hit the crypto markets.
The first one, memorable and colossal, was the one related to the implosion of the Terra ecosystem, and it rattled the entire crypto market.
Bitcoin’s price did not hold up very well, though the collapse stopped at $30,000, albeit with a plunge below $26,000.
The hit was very strong, so much so that even other stablecoins were fearful. This was an exceptional event, though not entirely unforeseen, with effects so severe that they had further consequences even in the following month.
Indeed, in June there was a further collapse because of the insolvency problems first of Celsius, then of 3AC, and then also of Voyager.
Fear of contagion that would jeopardize the very foundations of the crypto markets caused Bitcoin’s price to plummet to an annual low of $17,500, with a rebound to around the $20,000 mark thereafter.
The situation actually seems to have stabilized over the past 30 days, although further declines cannot be ruled out a priori.
Curiously enough, in both collapses following the post-halving bubble, in 2014 and 2018, the minimum value touched after the ATH was 85% lower than the ATH itself, while for now the 2022 low stopped at -74% below the high of 2021. However, it is worth mentioning that proportionally, the 2021 growth was lower than that of 2017, and especially lower than that of 2013.
Hence this was the deflation of a speculative bubble that inflated in 12 months, from December 2020 to November 2021, and lasted at least seven months from December 2021 to June 2022. It was neither a linear nor a gentle path, but one produced by a series of collapses on which problems completely unrelated to Bitcoin also had an impact.
In the long run, everything seems to be proceeding more or less as usual, albeit with somewhat smaller proportions than the resounding ones of past years.