Every crypto crash follows the same script: Bitcoin loses 10% in a few hours, other cryptos lose 20 or 30%, and explanations fly in every direction. Between October 6, 2025 and July 1, 2026, Bitcoin went from $126,200 to $57,800, a 54% drop. It wasn't a first: it was its fifth fall of more than 50% since 2017.
These drops don't come out of nowhere. They almost always have the same causes, which add up: interest rates, leverage, bankruptcies, big holders selling, panic and the fragility of small cryptos. Understanding them won't spare you the next crash, but it will help you avoid going through it blind.
Why crypto crashes harder than the stock market
A stock has a company behind it, with profits you can estimate. A crypto often has no profits and no revenue stream: its price rests mostly on what buyers are willing to pay tomorrow. When confidence fades, nothing slows the fall.
Three features of the crypto market then amplify every move:
- It never closes. Selling can pile up at night and over weekends, when few buyers are around.
- Leverage is easy to get. Platforms let you borrow up to dozens of times your stake, which turns a drop into forced selling.
- Many tokens trade thinly. A few large orders are enough to sink their price.
Key point: crypto falls faster than traditional markets because nothing supports its price when confidence disappears, and because leverage turns an ordinary drop into a cascade.
1. Interest rates and global liquidity
Cryptos are among the riskiest assets. When central banks raise rates, safe investments pay again, borrowed money costs more, and investors cut what is riskiest first.
In 2022, the US Federal Reserve raised its key rate from near 0% in March to over 4% in December, the fastest increase in decades. Over the same period, Bitcoin went from $69,000 (November 2021) to $15,476 (November 2022), a 78% drop. A single announcement on inflation or tariffs can be enough to trigger a red day, because it changes what the market expects from rates.
2. Leverage and cascading liquidations
This is the cause of the most brutal drops. A trader buying with 10x leverage loses their whole stake if the price falls 10%. Before that happens, the platform sells the position automatically: that's a liquidation. These forced sales push the price down, which triggers more liquidations, and so on.
On October 10, 2025, after the US announced 100% tariffs on Chinese imports, more than $19 billion in positions were liquidated in 24 hours according to CoinGlass, the largest amount ever recorded. That day, Bitcoin fell from $122,550 to $102,000 on Binance, a 17% intraday drop. Many small cryptos lost far more in a few minutes.
3. Bankruptcies and fraud
When a major platform or project collapses, its customers lose money, but above all the whole market loses confidence. Two examples marked 2022:
- Terra (May 2022). The UST stablecoin lost its peg to the dollar, and the LUNA token, meant to defend it, lost almost all its value in a few days.
- FTX (November 2022). This major exchange went bankrupt after it emerged that customer funds had been misused. Bitcoin hit its cycle low a few days later, at $15,476 on November 21, 2022.
After each bankruptcy, connected players have to sell to cover their losses, which drags the fall out.
4. Big holders and funds selling
A large share of crypto is concentrated in a few hands: founders, early investors, funds, miners, and since 2024 spot Bitcoin ETFs. When these players sell at the same time, supply quickly outstrips demand.
For small cryptos, the risk often comes from scheduled unlocks: tokens reserved for the team or investors are released on a known date, and their holders, who got in at a very low price, have every reason to sell. These schedules are public: checking them before buying avoids bad surprises.
5. Fear and panic selling
Once the fall has started, psychology takes over. Recent buyers sitting on losses sell to stop the pain; others sell because everyone is selling. Social media speeds things up. The Fear & Greed Index measures this mood from 0 (extreme fear) to 100 (extreme greed). It stood at 68, in greed territory, on October 22, 2026.
Fear often pushes people to sell at the worst moment, after the fall. Other market mood indicators are explained in the Market and sentiment section.
6. Small cryptos fall harder than Bitcoin
When the market pulls back, money retreats to what looks most solid, first Bitcoin and stablecoins. Other, less traded cryptos then lose more. On October 22, 2026, Bitcoin made up 59.5% of the total crypto market value according to CoinGecko: it drags everything else, in both directions. That's why a crypto can collapse with nothing changing in its project: what really makes a crypto go up also works on the way down.
Bitcoin's biggest crashes in numbers
Here are Bitcoin's five steepest falls since 2017, measured between the intraday high and low on Binance:
| Period | From the high | To the low | Drop | Main trigger |
|---|---|---|---|---|
| Dec. 2017 to Dec. 2018 | $19,799 | $3,156 | 84% | End of the ICO bubble |
| Feb. to Mar. 2020 | $10,500 | $3,782 | 64% | Global Covid-19 panic |
| Apr. to Jun. 2021 | $64,854 | $28,805 | 56% | Excess leverage, mining ban in China |
| Nov. 2021 to Nov. 2022 | $69,000 | $15,476 | 78% | Rate hikes, Terra, FTX |
| Oct. 2025 to Jul. 2026 | $126,200 | $57,800 | 54% | Record liquidations, tariffs, rates |
Bitcoin climbed back after each of these crashes, but it took several months, sometimes several years, to return to the previous peak. Many other cryptos never did. Past performance is not a reliable indicator of future results.
Key point: a drop of 50% or more is not a rare accident in crypto. It has happened to Bitcoin five times in less than ten years, and other cryptos have generally done worse.
What to check when crypto crashes
A fall shouldn't be judged in the heat of the moment. Before deciding anything, ask yourself these questions:
- Does the cause affect the whole market or only your crypto? A general drop linked to rates has nothing to do with a flaw in a project.
- Is what justified your purchase still true? Usage, token supply, investment horizon.
- Has your invalidation level been reached? It's the price, set in advance, at which your reasoning no longer holds.
- Are you using leverage? If so, work out the price at which your position would be liquidated.
- Is the amount at stake money you can afford to lose? If the fall keeps you up at night, your position is probably too big.
The method for setting these levels is detailed in our guide to analyzing a crypto, and free sites for tracking liquidations and sentiment are compared in our selection of tools. Not every crypto reacts the same way to a crisis: the example of Tron, driven by stablecoin transfers, fell much less than Bitcoin in 2025 and 2026. If you trade short term, Signal Clair also offers reports for traders, with scenarios and an invalidation level calculated for the crypto of your choice.
What to remember about a crypto crash
A crypto crash is almost always a mix of the same causes: rising rates, leverage that forces selling, a bankruptcy that wipes out confidence, big players selling, then panic finishing the move, harder on small cryptos than on Bitcoin. You can't know when the next crypto crash will come. You can, however, decide ahead of it your position size, your invalidation level and your use of leverage, so that next time you follow your plan rather than your fear.