Black Thursday Bitcoin market collapse
Bitcoin experiences one of its most severe crashes, plummeting over 50% in 24 hours to below $4,000, causing cascade of liquidations on derivatives exchanges.
On March 12, 2020, Black Thursday Bitcoin market collapse. Bitcoin experiences one of its most severe crashes, plummeting over 50% in 24 hours to below $4,000, causing cascade of liquidations on derivatives exchanges.
The crash began in Asian trading hours and accelerated throughout the day as global panic about COVID-19 intensified and liquidity evaporated across all financial markets. At its lowest point, Bitcoin briefly traded below $3,800 on some exchanges, representing a decline of approximately 75% from its 2019 high of $14,000 and erasing nearly all the gains from the previous year.
The mechanics of the crash revealed vulnerabilities in cryptocurrency market infrastructure and the dangers of excessive leverage. As Bitcoin's price fell, leveraged long positions on derivatives exchanges hit their liquidation thresholds, automatically triggering margin calls and forced selling. This selling pushed prices lower, triggering additional liquidations in a vicious feedback loop.
BitMEX, the largest Bitcoin derivatives exchange, experienced severe technical difficulties, going offline multiple times during the height of the crash—outages that many traders viewed as suspicious given they prevented users from managing positions or closing losing trades. The exchange also came under criticism for liquidation procedures that many felt exacerbated the crash.