Era 08 · 2020 — 2022

COVID & Crypto Winter

Peak to trough

−34% in 33 days

Pulse cycle

3.5s

COVID produced the fastest bear market in history — the S&P 500 fell 34% in 33 days — and the fastest recovery, powered by a $5T Fed and Treasury response. Two years later, the same liquidity bubble that drove the recovery unwound in crypto. Luna/UST lost $60B in three days. FTX — once valued at $32B — turned out to be a fraud. The Nasdaq fell 33%.

Events in this era

Mar 2020

COVID crash and the Fed bazooka

The S&P fell 34% in 33 days. The Fed cut rates to zero, announced unlimited QE, and — for the first time — began buying corporate bonds, including fallen-angel junk debt. Within five months, the market had recovered to all-time highs. The response defined the term 'Fed put' for the next two years.

Fastest ever bear market; fastest ever recovery

Nov 2022

FTX and the end of free money

FTX — an offshore crypto exchange valued at $32B, endorsed by senators, athletes, and most of Silicon Valley — collapsed over four days after leaked financials revealed it had been commingling customer funds with its proprietary trading arm. $8B in customer deposits were missing. Its founder was convicted of seven counts of fraud a year later.

$8B missing; end of the 2021 liquidity era

May 9 — 12, 2022

TerraUSD depegs; Luna evaporates

TerraUSD, an algorithmic stablecoin with an $18 billion market cap, broke its peg to the dollar on May 9. The mechanism designed to restore the peg produced a death spiral. Luna, the supporting token, fell from $80 to fractions of a cent in 72 hours. Roughly $60 billion in combined value destroyed. The event triggered the cascading failures of Three Arrows Capital, Voyager, Celsius, and eventually FTX six months later.

$60B destroyed in 72 hours; crypto winter begins

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Global Financial Crisis

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