In the early hours (Eastern Standard Time) of Saturday 17 April 2021, BitCoin crashed to under $100, down from over $80,000 the night before.
In the early hours (Eastern Standard Time) of Saturday 17 April 2021, BitCoin crashed to under $100, down from over $80,000 the night before. There were no news stories, nothing on the forums. But something was happening in the market.
News came through of a bank run in China. A large Hong Kong-based BitCoin exchange had defaulted on its commitments to its customers, following a fraud by an employee who’d absconded with over $1 billion worth of BitCoins. The depositors panicked and withdrew their funds in BitCoin. The exchange did not have enough in cash to cover all of the withdrawals, and soon went into bankruptcy. This caused a general run on other exchanges, which led to similar runs at banks around the world, and banks had no choice but to call in loans they had made to BitCoin investors – this was happening even though there were no legal agreements that forced them to do so!
As these other loans were called in, investors sold off their BitCoins as fast as they could, leading to further panic selling. Within hours the price dropped from $90 down to under $50 within minutes; then down to under $10; then over $1 million for one Bitcoin – which was now only worth about 1 cent; and finally back up again close to $1,000 after many hours of high volatility trading as people tried desperately to find a floor for what had once been a very stable asset.
“We mustn’t allow people like this into our country ever again.”
The Chinese authorities arrested anyone they could find who might be involved with fraudulent activities relating to this collapse (including some prominent Bitcoin supporters). When asked what he thought about it all, Xi Jinping said “We mustn’t allow people like this into our country ever again”.