On March 13, 2020, the cryptocurrency market experienced what would become known as Black Thursday — a devastating crash that wiped out over $1 billion in leveraged positions and sent Bitcoin plummeting below $4,000 for the first time in over a year. The crash, triggered by the World Health Organization declaration of COVID-19 as a global pandemic, would ultimately become one of the most consequential moments in Bitcoin history.
TL;DR
- Bitcoin crashed from approximately $8,000 to a low of $3,858 on Bitstamp within 24 hours
- Over $1.1 billion in crypto positions were liquidated as cascading sell orders overwhelmed exchanges
- The total cryptocurrency market cap shed roughly $30 billion, a 40% decline
- Ethereum fell below $100, with most altcoins losing 50% or more in a single day
- WHO declared COVID-19 a pandemic on March 11, and President Trump declared a U.S. national emergency on March 13
The Prelude: A World on Edge
The opening weeks of 2020 had been surprisingly optimistic for Bitcoin. The leading cryptocurrency entered January trading around $7,000 and had rallied above $10,000 by mid-February. Traditional markets shared the optimism — the S&P 500 had just touched an all-time high. But an invisible threat was rapidly approaching Western shores.
While parts of Asia had been battling what was then an unnamed virus since late 2019, the Western world remained largely complacent through February. That changed abruptly when the World Health Organization officially labeled COVID-19 a global pandemic on March 11, 2020. Two days later, on March 13, U.S. President Donald Trump declared a national emergency. Panic engulfed every financial market on the planet.
The Crash: 50% Wiped Out in Hours
What happened next was unprecedented in crypto relatively short history. Bitcoin was trading around $8,000 when the selling pressure became overwhelming. Leveraged traders who had bet on higher prices were forcibly liquidated, triggering automated sell orders that pushed the price down further. This cascading effect created a feedback loop of destruction.
Within hours, Bitcoin had plunged to an intraday low of $3,858 on Bitstamp — a decline of more than 50% from its pre-crash levels. The cryptocurrency price chart showed a near-vertical drop that stunned even veteran traders who had weathered the 2018 bear market.
According to CoinMarketCap data, Bitcoin closed the day at approximately $5,563, having recovered somewhat from the absolute bottom but still representing a devastating loss. Ethereum fared even worse, dropping below $100 during the crash before settling around $133. Altcoins across the board shed 50% or more of their value in a single session.
A Bloodbath in Derivatives
The derivatives market amplified the carnage dramatically. Over-leveraged traders on futures platforms, particularly those using perpetual swap contracts, faced a wave of forced liquidations. Major exchanges recorded more than $7 billion in liquidations during the two-day crash, with BitMEX accounting for a significant portion of the damage.
The cascading nature of these liquidations meant that each round of forced selling pushed prices lower, which in turn triggered another round of liquidations. It was a textbook example of how leveraged trading can transform a significant correction into a catastrophic market event.
DeFi First Major Stress Test
The nascent decentralized finance sector faced its first real crisis. MakerDAO, the protocol behind the DAI stablecoin, experienced a massive liquidation event on its collateralized debt positions. As Ether price collapsed, the system automated liquidation auctions failed to function properly in the extreme market conditions, resulting in collateral being sold for virtually nothing. Some users lost over $8 million in total, and MakerDAO would later vote against compensating the affected vault owners.
The Black Thursday crash exposed critical vulnerabilities in early DeFi protocols, particularly around oracle pricing, liquidation mechanics, and the assumption that markets would always have sufficient liquidity. These hard lessons would shape the development of DeFi infrastructure for years to come.
Voices From the Wreckage
The crash drew commentary from all corners. Edward Snowden, the former NSA contractor living in exile, saw the moment as an opportunity, tweeting that it was a highly opportune time to buy Bitcoin. His perspective would prove prescient.
On the other side, prominent Bitcoin skeptic Peter Schiff declared on Kitco News that the crash proved Bitcoin was not a safe haven asset and a very risky asset that had collapsed by more than the stock market. Bloomberg compared the event to the bursting of the 2017 crypto bubble, and mainstream media outlets were quick to proclaim Bitcoin dead — once again.
Why This Matters
Black Thursday was far more than a market crash — it was a defining moment that reshaped the cryptocurrency landscape. In the immediate aftermath, Bitcoin demonstrated remarkable resilience, recovering to nearly $10,000 by May 2020. The crash eliminated excessive leverage from the system, creating what analysts described as a psychological floor from which the next bull run would launch.
The events of March 2020 also accelerated institutional interest in cryptocurrency. As governments worldwide unleashed unprecedented monetary stimulus in response to the pandemic, Bitcoin fixed supply narrative gained tremendous appeal. Within a year, BTC would surge past $60,000 — a fifteen-fold increase from the Black Thursday bottom — proving that the crash was not Bitcoin death, but rather its rebirth.
For the DeFi sector, Black Thursday served as an invaluable stress test. The vulnerabilities exposed in MakerDAO and other protocols led to significant improvements in liquidation mechanisms, oracle resilience, and risk management frameworks that would underpin the DeFi explosion of 2020 and 2021.
Disclaimer: This article is for historical and informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk. Always conduct your own research before making investment decisions.
i was awake when it happened. watching the bitstamp orderbook go from 8k to 3858 in minutes was surreal. nothing prepares you for that kind of candle
that 3858 print on bitstamp was a single thin order book. other exchanges held higher. still brutal though
1.1 billion in liquidations and the exchanges still handled it. say what you want about crypto but the infrastructure held
the S&P circuit breakers going off at the same time was the real signal. everything was correlating to 1
bought my first whole coin during that crash at 4200. held through everything. different times