Bitcoin: The COVID Black Thursday Crash That Halved Its Price in a Day

On the evening of Wednesday 11 March 2020, hours after the World Health Organization declared COVID-19 a pandemic, President Donald Trump went on television from the Oval Office and announced a ban on most travel from Europe. By the time New York opened the next morning, investors wanted one thing: cash. Over the following 26 hours Bitcoin fell from about $7,900 to below $4,000, touching roughly $3,800 on some exchanges early on Friday 13 March. Half its value was gone in about a day.

It became known as Black Thursday. The S&P 500, the index of America's 500 biggest listed companies, fell 9.5% on 12 March, its worst day since the 1987 crash. Gold fell. Oil fell. Bitcoin, which its fans had called digital gold, a safe haven for exactly this kind of panic, fell further and faster than almost anything else. It had been worth $10,500 in mid-February.

A market with no circuit breaker

When the S&P 500 drops 7%, the New York Stock Exchange stops trading for 15 minutes. These "circuit breakers" tripped four times that month. Crypto has nothing like them. It trades all day, every day, and when buyers vanish the price simply keeps falling until it finds one.

The fall was made worse by leverage, trading with borrowed money. On BitMEX, then the dominant crypto exchange for this kind of betting, a trader could put down $1,000 and bet as if they had $100,000, a hundred times leverage. The catch is the liquidation. When the price moves against a borrowed bet far enough to eat the trader's deposit, the exchange sells the position automatically. It is a margin call with no phone call. Every forced sale pushes the price lower, which triggers the next round of forced sales.

That is what happened on 12 March. Coin Metrics, a crypto data firm, traced two waves. Between 10:00 and 11:00 UTC Bitcoin fell from $7,300 to $5,690. Then, between 23:00 that night and 02:15 the next morning, it fell from $5,800 to about $3,900 on its reference price. More than $1 billion of bets on BitMEX alone were closed by force, by most counts. At one point BitMEX had about $200 million of positions waiting to be sold into only $20 million of buy orders.

The outage that stopped the fall

At 02:16 UTC on 13 March, BitMEX stopped working. The exchange later said it had been hit by a denial-of-service attack, a flood of junk traffic, aimed at its public chat box, which ran on the same machines as its trading engine. A second attack followed at 12:56 UTC. For a while, nobody could trade.

With the biggest seller in the market offline, the forced selling stopped and Bitcoin bounced from about $3,800 to above $5,000 within hours. Coin Metrics and others argued that BitMEX's outage had acted as crypto's accidental circuit breaker. That claim cuts both ways: it suggests that the exchange's own liquidation engine had been dragging the price down, and that people whose positions were sold at the bottom had been sold at prices that did not last.

The damage spread to the newer world of decentralised finance, or DeFi, where code does the job of a bank. MakerDAO, which lets people borrow its DAI digital dollar against Ether deposits, was supposed to auction off borrowers' collateral when prices fell. Ether dropped from about $195 to below $100 and the Ethereum network jammed with traffic. Some bidders ended up winning collateral for nothing: according to later analysis, 1,462 of 3,994 liquidation auctions were won with zero bids, and about $8.32 million of borrowers' Ether went for free. Maker had to create and sell new MKR tokens, a share issue in all but name, to cover the shortfall. A $28 million class action filed by one borrower, Peter Johnson, was sent to private arbitration by a California federal judge.

The fastest rebound on record

Then governments did what they had not done in 2008 at anything like this speed. The Federal Reserve cut interest rates to zero on Sunday 15 March and promised $700 billion of bond buying. On 23 March it made the buying open-ended. On 27 March Congress passed the $2.2 trillion CARES Act, which sent $1,200 cheques to most American adults.

Cheap money flowed into everything, including Bitcoin. In May the hedge fund manager Paul Tudor Jones told clients he had bought Bitcoin as a hedge against inflation. Bitcoin's scheduled "halving", the four-yearly cut in new supply that works like a company halving its share issuance, followed on 11 May. In August MicroStrategy, a business software company run by Michael Saylor, put $250 million of its cash into 21,454 Bitcoin. Square and PayPal followed in October. On 16 December Bitcoin passed its 2017 record of about $20,000. It ended the year near $29,000 and reached $64,000 in April 2021.

Anyone who had simply held through Black Thursday was up roughly sixteenfold in thirteen months. The traders liquidated at $3,800 got none of it.

Six years later, still in court

The arguments over that night have outlived BitMEX itself. The exchange's founders, Arthur Hayes, Ben Delo and Samuel Reed, were charged in October 2020 by US prosecutors and the Commodity Futures Trading Commission with failing to run proper checks on customers. They pleaded guilty, and in March 2025 President Trump pardoned them and BitMEX. On 23 July 2026 BitMEX announced it would close, and it stopped trading on 23 September 2026.

Eleven days before the closure, on 12 September 2026, the estate of Celsius Network, the crypto lender that went bankrupt in 2022, sued five BitMEX companies in the US Bankruptcy Court in Manhattan. Its complaint, brought by the estate's litigation administrator, Blockchain Recovery Investment Consortium, says BitMEX liquidated 1,325.84 Bitcoin of Celsius collateral on 12 March 2020 and 5,034.33 Bitcoin from an investment fund called JST the next day. It alleges BitMEX controlled the prices that triggered liquidations, the engine that sold them and the insurance fund that kept part of the proceeds, and that some sell orders were placed more than 24% below the best price on offer. It seeks at least 6,360 Bitcoin, worth close to $490 million at September 2026 prices. The claims are unproven, and BitMEX had not answered them publicly when the suit was reported. Bitcoin that sold for under $4,000 on Black Thursday trades near $83,000 in October 2026.