The cryptocurrency market experienced one of its most brutal single-day selloffs in recent memory on February 5, 2018, as Bitcoin shed roughly 14% of its value and crashed below the $7,000 mark for the first time since November 2017. The flagship cryptocurrency tumbled to approximately $6,955, according to CoinMarketCap data, representing a staggering 38% decline over the previous seven days alone.
The carnage was not limited to Bitcoin. Ethereum, which had been the sole holdout among the top three cryptocurrencies to maintain year-to-date gains, also plunged into negative territory for 2018, dropping approximately 15% in a single day to trade near $698. Ripple (XRP) fared even worse, down 67% year-to-date at just $0.73. In total, Bitcoin investors watched approximately $67 billion in market value evaporate over the course of a single week.
TL;DR
- Bitcoin crashed below $7,000, reaching $6,955 — a 38% decline over seven days
- Ethereum lost 15% in 24 hours and turned negative for 2018
- Major U.S. and U.K. banks banned cryptocurrency purchases via credit cards
- China deployed its Great Firewall to block foreign crypto exchange websites
- Total Bitcoin market cap fell to approximately $117 billion
Banks Ban Crypto Credit Card Purchases
A significant catalyst behind the accelerated selloff was the coordinated move by major financial institutions to restrict cryptocurrency purchases using credit cards. Bank of America, J.P. Morgan, Citigroup, Capital One, and Discover all announced they had either implemented or were planning bans on customers using credit cards to buy cryptocurrencies like Bitcoin. The trend crossed the Atlantic on the same day, as the United Kingdom’s Lloyds Banking Group followed suit.
The banks cited concerns about speculative risk and the potential for customers to accumulate unmanageable debt amid extreme cryptocurrency volatility. For a market that had already been reeling from weeks of negative headlines, the loss of a major on-ramp for retail investors delivered a punishing psychological blow.
China Escalates Its Crypto Crackdown
Adding fuel to the fire, China announced it would block access to all domestic and foreign cryptocurrency exchange websites using its infamous Great Firewall. The People’s Bank of China, through its affiliated Financial News publication, stated that “overseas transactions and regulatory evasion have resumed” since the country’s initial ban on domestic exchanges in September 2017. The central bank warned that “risks are still there, fueled by illegal issuance, and even fraud and pyramid selling.”
The crackdown extended beyond exchange access. Cryptocurrency-related advertisements were scrubbed from China’s Baidu search engine and the Weibo social media platform, mirroring Facebook’s decision to ban crypto advertising just days earlier on January 30. The People’s Bank of China indicated it would “tighten regulations” on Chinese citizens participating in overseas cryptocurrency transactions and ICOs.
The Tether Cloud Lingers
Underlying the market panic were persistent concerns about Tether (USDT) and whether the stablecoin’s issuance was artificially inflating Bitcoin prices. Questions about whether each USDT token was truly backed by one U.S. dollar had been swirling for weeks, creating an additional layer of uncertainty for investors already grappling with regulatory headwinds and a rapidly deteriorating price chart.
A Brutal Correction From December Highs
For investors who had bought Bitcoin near its all-time high of approximately $19,500 in December 2017, the February 5 crash represented a painful 63% decline in portfolio value. Bitcoin was down 48% year-to-date, and the total value of Bitcoin in circulation had fallen to approximately $125.8 billion. The broader cryptocurrency market cap had contracted dramatically from its January peak.
Despite the widespread panic, some prominent figures in the cryptocurrency community remained defiant. Jameson Lopp, a well-known Bitcoin developer, publicly stated: “The more loudly folks proclaim that Bitcoin is dying, the more dollars I dump for BTC.” Similarly, the Bitcoin advocate known as Vortex argued that “this changes nothing” and pointed to the upcoming Bitcoin halving as a catalyst for future price appreciation.
Why This Matters
The February 5, 2018 crash was a watershed moment that exposed the fragility of cryptocurrency markets when faced with coordinated institutional resistance. The simultaneous credit card bans from the world’s largest banks and China’s escalation of its anti-crypto posture demonstrated how quickly regulatory action could choke off retail demand. However, the event also revealed the resilience of the Bitcoin community, as long-term holders and advocates continued accumulating during the panic. This crash would ultimately prove to be a painful but necessary reset that set the stage for the next market cycle.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk. Past performance is not indicative of future results. Always conduct your own research before making investment decisions.
banks banning crypto purchases on credit cards while the market was crashing. pour one out for everyone who got margin called that week
my bank blocked the purchase and i had to wire money to an exchange. took 3 days. by then btc was at 6200. thanks for nothing bank of america
btc_scraper_ same experience. bank blocked the wire and by the time it cleared BTC was 6000 cheaper. the onramp friction cost me more than the crash did
38% in seven days. $67B in market cap gone. and China was blocking exchanges on top of everything. feb 2018 was brutal
Ripple down 67% YTD at $0.73 and people were still calling it the banks coin. the copium was flowing
38% in a week and china blocking exchanges simultaneously. 2018 was the year that separated real believers from tourists. btc at 6955 felt like the end of the world
Klaudiusz P. 38% in a week plus china firewalling exchanges. that was the moment 2017 retail realized they had no exit liquidity. the structural damage took 2 years to recover
ETH losing 15% and going negative for 2018 was the real signal. when even the alt-L1 market leader breaks support, nowhere is safe
China deploying the Great Firewall against foreign exchanges was the final nail. you literally couldnt access your funds if your exchange was offshore
great_wall_crypto China firewalling offshore exchanges while the market cratered. people literally could not access their funds during the crash. trapped capital with no exit
ETH at 698 down 15% in a day and XRP at 0.73 down 67% YTD. the 2018 bloodbath makes every crash since look mild. credit card ban was just salt in the wound
the 2018 crash was when i learned what a stop loss was. expensive lesson at 14% down
banks banning credit card purchases was the real panic signal. when traditional finance cuts off the onramp you know they saw the cliff coming
bear_survivor_2018 citibank and bank of america banning crypto on credit was coordinated. they released statements within hours of each other
67% YTD drop on XRP at $0.73 and it still took 3 more years to get clarity. anyone who held from this crash deserved the eventual win
banks banning credit card purchases was the moment normies got priced out of buying the dip. the playing field was never the same after that
survivor_2018 banks blocking crypto purchases on credit cards was the most hypocritical move. same banks that caused 2008 suddenly worried about consumer protection. ok
survivor_2018 banks blocking credit card purchases while the market was crashing was the most hypocritical move. same banks were fine with cash advances at casinos
ETH at $698 down 15% in a day. XRP at $0.73 down 67% YTD. those numbers hit different when you lived through it. 2018 was the real stress test for crypto
banks blocking crypto purchases on credit cards in the middle of a 38 percent crash. same banks that process gambling and cash advances no problem. the hypocrisy was loud