What was the biggest correction the crypto market has ever experienced? How long will the correction last?

Author: Lim Yu Qian, Coingecko; Compiler: Wuzhu, Golden Finance

What is the biggest correction in the cryptocurrency market?

The most severe correction in the global crypto market over the past decade was the 39.6% plunge on March 13, 2020 due to Covid-19. The massive sell-off caused the total cryptocurrency market value to plummet from $223.74 billion to $135.14 billion.

In contrast, the biggest cryptocurrency market sell-off so far this year was significantly less severe at only -8.4%, occurring on March 20, 2024.Similarly, while the most recent decline fell for four consecutive days, causing the total cryptocurrency market value to shrink from $2.44 trillion on August 2 to $1.99 trillion on August 6, none of these declines were large enough to be considered a market correction.

In fact, cryptocurrencies have not recorded a single day of market correction since the FTX crash in November 2022.

Bitcoin also experienced its largest price correction of -35.2% on March 13, 2020, while Ethereum experienced the second largest price correction of -43.1% on the same day as crypto investors fled risk assets overnight due to global uncertainty.

The second largest cryptocurrency correction occurred on September 14, 2017, when the total cryptocurrency market capitalization experienced a -22.3% correction, falling from $136.55 billion to $106.14 billion. This coincides with Bitcoin's third largest price correction of -20.2% on the same day. This correction came against the backdrop of relatively strong performance throughout the year, and both the cryptocurrency market and Bitcoin recovered quickly the next day, highlighting the high volatility of cryptocurrencies.

How long will cryptocurrency corrections last?

The longest cryptocurrency corrections in the past decade lasted only 2 days at most. From 2014 to date, the global cryptocurrency market has experienced 3 such consecutive corrections. These two corrections occurred in early 2018, when the cryptocurrency market began to cool down after setting new highs, and in late 2022 due to the FTX crash and contagion:

• January 16 (-11.8%)-17 (-13.4%), 2018

• February 5 (-10.3)-6 (-19.0%), 2018

• November 9 (-10.1%)-10 (-13.5%), 2022

That being said, there have been instances of crypto market corrections, but they were not consecutive. For example, during the 2022 Terra Luna crash, total crypto market capitalization fell 12.0% on May 10, stabilized briefly the next day, but then fell another 11.0% on May 12.

Meanwhile, Bitcoin has only recorded 2 consecutive multi-day crypto adjustments. The first was in early 2015, amid regulatory concerns and adverse developments, including the Bitstamp centralized cryptocurrency exchange hack. Bitcoin’s next 2-day price adjustment occurred during the debate over the proposed Bitcoin Infinite fork.

It’s worth noting that Bitcoin’s two longest price corrections were both related to issues with the asset itself, rather than broader cryptocurrency developments:

• January 13 (-17.5%) to 14 (-22.3%), 2015

• March 17 (-11.8%) to 18 (-10.4%), 2017

Ethereum, on the other hand, has experienced 6 consecutive price correction days to date. While Ethereum’s first two longest price corrections occurred in the asset’s early years, the third in June 2016 was a result of the Dao hack. Ethereum’s subsequent 2-day price corrections have coincided with global cryptocurrency sell-offs during the 2018 bear market and the 2022 FTX crash.

• October 30 (-10.5%) to 31 (-12.9%), 2015

• February 16 (-17.9%) to 17 (-14.3%), 2016

• June 17 (-24.9%) to 18 (-27.3%), 2016

• February 5 (-11.4%) to 6 (-18.0%), 2018

• November 20 (-15.4%) to 21 (-12.6%), 2018

• November 20 (-15.4%) to 21 (-12.6%), 2022

• November 20 (-15.9%) to 21 (-12.6%), 2022 9th (-15.0%) to 10th (-17.9%)

How many days have cryptocurrencies experienced corrections?

Since 2014, cryptocurrencies have experienced 62 days of market corrections, which accounts for 1.6% of this time. The average cryptocurrency market correction on these days was -13.0%, just 3 percentage points above the technical cutoff definition of a market correction.

In 2018, cryptocurrencies experienced 18 market corrections, twice as many as the highest number of nine-day market corrections recorded in 2017. The frequency of cryptocurrency market corrections in 2018 was likely due to the bearish conditions of the volatility at the time, as cryptocurrencies cooled off from the bull run that brought the asset class more mainstream acceptance.

It is worth noting that despite the challenging macroeconomic environment, cryptocurrencies have experienced 0 days of correction in 2023 as the market was able to consolidate and gradually recover. Bitcoin and Ethereum similarly did not experience any price correction days last year.

While the global cryptocurrency market and Bitcoin have not experienced any correction days so far this year, it remains to be seen whether this will be the case for the rest of 2024. Ethereum, on the other hand, has already experienced 2 days of price correction this year, namely -10.1% on March 20 and -10.0% on August 6, 2024.

Top Cryptocurrency Corrections

Ranking of the 20 largest daily adjustments in the global cryptocurrency market between January 1, 2014 and August 6, 2024 is as follows:

Ranking of the 20 largest daily adjustments in Bitcoin prices during the same period:

The ranking of the 20 largest daily adjustments in Ethereum prices during this period is as follows: