Is crypto crashing?
The stock market is down—and so is bitcoin. Since December 2024, bitcoin (BTC) has fallen from over $106,000 to under $78,000 in recent days. (All figures in this article are in U.S. dollars.) That’s a 26% drop, most of which has happened in February and March. The decline is likely driven by fear and uncertainty stemming from a global trade war and the resulting possibility of inflation, a recession or both. What does this mean for Canadian investors? Let’s put this in perspective.
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Crypto crash or just a correction?
A 26% price drop seems like a lot to investors accustomed to stock market movements, but it’s par for the course in crypto. While a 20% fall in a major stock index like the S&P 500 or the S&P/TSX Composite Index would be considered a bear market, 30% is merely a correction in crypto. BTC corrections shake out investors who can’t afford the volatility in their portfolio. In a full-blown crypto bear market—which has typically come around every three to four years—bitcoin has historically lost over 80% from peak to trough. (Read more about BTC’s bull and bear market cycles.)
Despite these bear market crashes of over 80%, BTC has risen over 8,400% over the past eight years, from Mar. 10, 2017, to Mar. 10, 2025. That’s a compounded annualized growth rate (CAGR) of over 74%. However, it would not be prudent to expect this high a return over the next eight to 10 years, because BTC is more mature as an asset class and, as a result, its risk-return profile has been reduced to some extent.
As the logarithmic chart below shows, BTC’s gains have tempered over the past five years, compared to what they used to be. All in all, while the recent drop in the BTC price is brutal for investors, it’s not out of the ordinary and, given BTC’s historical price movements, it’s to be expected.
Should you be greedy when others are fearful?
If you’re invested in crypto for the long term, you may be looking at the current price drop as a buying opportunity. In investing, it’s best to be greedy when others are fearful, and fearful when others are greedy, as Warren Buffett, CEO of Berkshire Hathaway, has said.
This means buying when prices are down and investors are panic-selling, and selling when prices and greed are high. There’s actually a fear and greed index that tracks the pulse of the crypto market. Right now, it’s screaming fear. That makes the current market a possible buying opportunity, for those willing to stomach the risk.
The graphic above shows the CMC Crypto Fear and Greed Index at 25, bordering on extreme fear (the red portion). Typically, periods of greed or extreme greed are good buying opportunities.
CMC Fear and Greed Index in the recent past
As the table below shows, this index has consistently indicated fear in the market during the past month.
