This article will give you a better understanding of the June 2022 crypto market crash and what it means for Bitcoin’s future. We will examine various previous crashes, both in the stock and crypto world to provide a somewhat more accurate grasp of why these crashes occur and also speculate on what things may look like moving forward.

The main catalysts for the June 2022 crypto crash were widely publicised in the media, most notably being the collapse of Terra Labs' Luna and USTerra (UST). In a nutshell, UST was a new brand of algorithmic stablecoin that relied on a smart contract to routinely burn Luna - the separate cryptocurrency - in order to mint new UST tokens that would help UST maintain its 1:1 peg to the USD. The algorithm would burn a small amount of Luna if UST price dropped to 0.99, and vice versa if the peg moved to 1.01. In May 2022, UST lost its vital 1:1 peg to the dollar, and no one really knows why - though there are several speculations. Terra supposedly had reserves to rectify an issue like this, but this was proven to be false also.

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What this meant was an accelerated and, unprepared for, burning of Luna which led to mass investor fear and the drastic 99.9% loss in price. $120 to less than $0.01 in a matter of days. The further knock-on from this, was major crypto lenders and exchanges like Celsius and Voyager liquidating due to massively over-leveraged positions, and Bitcoin dropped to its lowest price since December 2020.

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In hindsight, this issue seemed obvious; how can the algorithm work to maintain the price of a dollar equivalent product if there aren’t reserves enough to back it? The June 2022 crash is very similar to the housing crash and later recession of 2008.

There have been countless crashes in the stock markets, the most significant recent crash being in 2008; caused by an exponential overwhelming amount of mortgage-backed securities and reckless over-lending, which came to an ugly head in early 2008 with many financial institutions seeking billions of dollars of government help and hundreds-of-thousands of homeowners facing foreclosure. It was a long and arduous process and had various knock-on effects through the world’s economy. Just like in June 2022, over-leveraged securities (of near dollar equivalent) shook the whole market.

From these ashes, Bitcoin rose as the libertarian digital alternative to the trappings of fiat currencies that had just crashed. The economic world left the recession caused by the 2008 crash, and Bitcoin and cryptocurrency grew alongside it as more people awoke to the idea of digital assets and blockchain technology. It was not, of course, smooth upward sailing to the $69,000 all-time-high (ATH) Bitcoin price though. To gather a better idea of Bitcoin’s future let’s take a look at its most major crashes since 2009:

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June 2011 - 99% ‍

Fall after the biggest Bitcoin exchange, at the time, Mt. Gox openly announced it was being hacked the price fell from its ATH of $32 to less than $0.01.

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April 2013 - 83% ‍

The Mt. Gox exchange experienced unprecedented volume after a surge in Bitcoin popularity and crashed as a result. To bring even more investor fear, hackers took advantage of the exchange’s crash to steal even more Bitcoin. The price fell from $260 to around $50.

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May 2021 - 53% ‍

This was the year that Bitcoin hit its ATH of $69,000 in November, but there was a more than sizeable drop in May. This was due to some reality checks about the environmental impact Bitcoin and crypto mining had on the world, and some of its biggest advocates denouncing it for the same reason.

The standard of crypto exchanges has improved massively from 2011, they handle billions of dollars of volume each day and millions of users actively trading. Security has also improved drastically, with the number of exploits dropping from 251 in 2021 down to 64 in June 2022. We can see that the previous crashes from 2011 and 2013 were caused by a lack of confidence in exchanges and their security, and by 2021 the major crash was due to more cultural and societal reasons; showing how far exchanges have come in their cyber sophistication.
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There are countless statistics we can examine here to contemplate Bitcoin’s future: in 2022, 300 million people actively own cryptocurrency, and in 2021 there were 400,000 Bitcoin transactions per day. These numbers have been steadily growing since 2009, Bitcoin itself having a price increase of 9,000,000% and a mention of cryptocurrency on social media is an average of every 2 seconds. Another study found 67% of Millennials see Bitcoin as an all round better investment that gold.

There are so many studies similar to the ones above that proffer the same hypothesis: Bitcoin and crypto is growing and the future looks bright. We can examine the previous crashes and resulting price increases to consider June 2022’s drop just another bearish cycle in Bitcoin’s history. Will history repeat itself? Is another surge in popularity predestined to come? With the technology Bitcoin offers and the trusted sentiment that crypto is becoming more mainstream, it’s fair to say Bitcoin’s future after the June 2022 crash could quite easily be another turning point for the next bullish cycle.