A Brief History of Bitcoin Bear Markets

Every week the Mosaic research team will delve into important topics within the cryptoasset space.

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Jason Yannos and Eliézer Ndinga

If you’re a crypto investor, you might feel like the current bear market is never going to end. But history shows that is unlikely to be the case. Bitcoin has been declared dead more than 300 times over the course of its nine-year lifespan. To gain a little perspective, it’s worth analyzing the various bear markets since Bitcoin’s inception through 2018, and highlighting the different catalysts that drove prices and overall social sentiment into a tailspin.

We broke down cryptocurrencies into different bear-market periods. For our analysis, we define a bear market as a minimum of a 20 percent drop in price lasting for at least 2 months in time. Through this definition, we discovered four major bear market periods over the course of Bitcoin’s life, excluding the prolonged bear market of 2018 and onward.

Bear Market 1 (January 11, 2012 — July 11, 2012) — Hack Era

Duration: 185 Days | Peak Price: US$7.08 |Bear Market Low: US$4.22 | Decline -40%

The first major bear market of Bitcoin was in 2012. That year was marked by a series of hacks and other negative events that contributed to the uncertainty around Bitcoin. On January 11th, the price of Bitcoin peaked in this bear market cycle. But things got really bad after February 13th when TradeHill, then the second largest Bitcoin Exchange, was shut down due to regulatory issues. Bitcoin remained in a bear market during this period for a total of six months, dropping to US$4.22 on July 11th. Other events that contributed to the asset’s downtrend were the Bitcoinica hack, where 18,000 BTC was lost, and the Linode hack, where 46,000 BTC was taken from the web hosting provider.

Bear Market 2 (August 7, 2012 — December 6th, 2012) — Lawsuits Era

Duration: 111 Days | Peak Price: 13.35 |Bear Market Low: 8.4 | Drawdown: -37%

The second major bear market surfaced shortly after the first in the form of lawsuits from the exchange hacks just months before. These series of lawsuits ushered in even more negativity and a lack of faith to market participants at the time. On August 6th, a complaint was filed against Bitcoinica. Immediately on the following day, Bitcoin’s price dropped, illustrating the market’s focus on this narrative. Additionally, a series of negative events continued in September which contributed to prolonged negativity.

Bear Market 3 (November 29, 2013 — Jan 7th, 2015) — Crypto Winter

Duration: 415 Days | Peak Price: 1149.14 | Bear Market Low: 197.24 | Drawdown: -83%

2013 marked a very significant year not only in the history of Bitcoin’s bear markets, but in the history of Bitcoin as a whole. In October 2013, Silk Road was officially shut down by the FBI. Silk Road was an online black market also referred to as the first modern darknet market. However, Silk Road’s significance in the history of Bitcoin was that it represented the crypto asset’s first form of widespread user adoption. Although Silk Road ceased activity in October of that year, the price of Bitcoin continued to rally until the end of November before the market had fully digested the effects of the event.

It is always impossible to know when Bitcoin has reached its peak while events are ongoing, and the media didn’t help paint a clear picture of reality. At the time, even as the price of Bitcoin began dropping, headlines remained incredibly bullish. Some examples: “Bitcoin Price Hits $1,000 After Doubling in 7 Days. Whats Next?” and “Bitcoin Price Could Reach $98,500, Say Wall Street Analysts”.

During Bitcoin’s reversal period in January 2015, the general sentiment in headlines was negative. Some of the popular examples included: “Missing Mt Gox Bitcoins Likely an Inside Job”, “Why Some Bitcoin Exchanges Might Die in 2015”, and “CFTC Commissioner: Market Manipulation Could Shape Bitcoins Future.” Despite journalists’ efforts to help market participants understand and navigate market events, these headlines did not provide any positive signals to indicate the bottom of this bear market.


While it is challenging to accurately predict what drives price movements, it is clear that Bitcoin is highly influenced by specific events and narratives, both positive and negative, as well as through news outlets and social media channels. This analysis also demonstrates that the current bear market isn’t Bitcoin’s first, and probably won’t be its last.

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This article is intended for informational purposes only. The views expressed herein are not and should not be construed as legal or investment advice or recommendations. Recipients of this article should do their own due diligence, considering their specific financial circumstances, investment objectives, and risk tolerance before investing. The individuals contributing to this article have positions in some or all of the assets discussed. This article is neither an offer, nor the solicitation of an offer, to buy or sell any of the assets mentioned herein.