Satoshi Nakamoto, the Mt. Gox exchange collapse in 2014, the ICO boom of 2017, and regulatory developments impacting the crypto market. These historical crypto events have played a crucial role in shaping the evolution, perception, and regulation of cryptocurrencies.
Since central banks or government authorities do not regulate cryptocurrencies, the prices are subject to frequent change. However, certain factors influence the price of a cryptocurrency, including its ongoing events. These historical crypto events may also affect the demand or supply rate of the crypto asset, which in turn influences investors’ investment decisions.
Over the years, events such as Bitcoin adoption as legal tender in El Salvador have affected some aspects of cryptocurrency. Some of these historical crypto events have a positive impact, while others impact negatively.
In this article, you will discover four major historical crypto events and their consequences.
Major Exchange Hack – the Mt. Gox Incident That Happened in 2014
How it Started
The Mt.Gox exchange, sometimes known as MtGox, was a Tokyo-based exchange platform responsible for more than 70% of Bitcoin digital transactions. As a result, the Mt.Gox exchange was a significant factor in determining Bitcoin’s market situation. For instance, the platform ceased trading in 2013 to cool down the Bitcoin market. The exchange was growing tremendously, which unfortunately caught the attention of digital hackers.
This article on crypto security explains how you can protect your wallet from digital hackers.
What Happened?
As reported by Bloomberg, Mt.Gox lost about $480 million worth of Bitcoin to cybercriminals, which forced the company to declare bankruptcy. This unfortunate 2014 event caused the company to close its website after losing 850,000 bitcoins.
According to research, the Mt.Gox system was vulnerable and not secure enough, which allowed hackers to penetrate the platform. Since the historical crypto event, decentralized exchanges have gained more popularity because many believe them to be safer than centralized ones.
The Impact of Mt.Gox Fallout on Cryptocurrency
Bitcoin was stolen from Mt.Gox, and the entire cryptocurrency market capitalization dropped by billions of dollars. Also, the historical crypto event caused the price of bitcoin to reduce greatly by 20% in a single day.
Several crypto traders lost trust in crypto exchanges’ security, creating a bear market that lasted for many years. This also caused regulatory authorities to impose stricter measures on other crypto exchanges. For example, the SEC mandated crypto exchanges in the United States to register their company with the regulatory body before operation.
Even though the Mt.Gox fallout rubbed off investors’ confidence, this historical crypto event helped the crypto industry realize the need to tighten the security of the futures market. Since parties involved in futures trading are bound by contract, trading platforms must ensure traders’ assets are safe and available until the contract expiry date.
Case Study of How a Trading Platform Protects Crypto Futures Traders’ Data – Solus Finance
Foremost, the trading platform collects users’ data via the Know-Your-Customer (KYC) verification process, where you will be asked to provide a means of identification. Since the platform offers traders several account types, you may need to provide your financial information, such as liquid net worth or investment experience. This is to help determine the right account for you.
Bear in mind that the personal and financial information you provide on reliable trading platforms like Solus Finance is to help tailor the content and information you will receive. In situations where Solus Finance may need to share your information, it will be done for a good cause. This implies that users’ information is only shared with affiliate service providers for legal procedures, business transfers, and other legitimate reasons.
Even though the Mt.Gox exchange hack was due to the developer’s negligence, there have been scenarios where future traders are to blame for hackers’ interference. As a result, Solus Finance encourages its traders to take extra measures to secure their personal information. These measures can also be used for other reliable trading platforms, some of which include the following:
- Install anti-virus, anti-spyware, and firewall software on your computer.
- Regularly back up your vital data.
- Choose robust user credentials that a third party can’t easily guess.
- Avoid opening email attachments from strangers.
- Avoid using a public computer.
It’s safe to say Solus’s attention to user privacy pushed its popularity, especially in July. This rapid growth was also tweeted about:
🏆 Congrats to @SolusFinance, a future trading platform built on @shardeum, for #impressive growth stats:
📈 Avg. 726 users per minute
🚀 Peak day: 1.7k users per minute
Thanks to all #Solusites and partners for the crazy numbers and 💖#Shardeum #Shardeum_Allday pic.twitter.com/eOR9S1fcGI
— Shardeum AllDay (@Shardeum_AllDay) July 17, 2023The First U.S. Futures-Based Bitcoin ETF
How it Started?
On the 19th of October, 2021, the United States launched its first bitcoin exchange-traded fund (ETF), known as BITO. This historical crypto event is remarkable, as it generated more than $1 billion within the first few days of launching. Research also reveals that the BITO structure is futures-based, such that the ETF owned about ⅓ shares of the underlying futures market in just ten days.
The State of the Bitcoin ETF
Since the bitcoin ETF has yet to be approved by the U.S. Securities and Exchange Commission (SEC), some investors have raised concerns about possible market manipulation and fraud. On the other hand, other investors have high hopes that the Bitcoin ETF will be approved by the SEC in 2024.
Informed investors hope to approve bitcoin trading on the stock exchange because it will provide more exposure to the digital asset without necessarily managing it themselves. A recent report from Yahoo Finance revealed that the bitcoin ETF will be in the United States sooner rather than later. This is because established institutions like BlackRock and Grayscale have supported the Bitcoin ETF proposal more than ever.
Possible Impact of The Bitcoin ETF on Bitcoin Price
Spot bitcoin ETFs may increase the liquidity rate of bitcoin by allowing excess buyers and sellers. However, this will, in turn, increase market prices as the involvement of mainstream investors will push the market demand higher. Other reasons why bitcoin ETF may raise the price of bitcoin are increased trading volumes and the enhanced adoption of bitcoin into the mainstream financial system. This will create more avenues for day traders and hedge funds but may lead to more volatility.
Ethereum Launched EIP-1559 and The Merge of Eth2
The Ethereum merge’s second phase is a historical crypto event that took place within the Ethereum ecosystem, and it was launched on the 15th of September, 2022. During this merge upgrade, Ethereum developers adopted the Proof of Stake (PoS) mechanism, which was supposed to be cheaper, more secure, and more efficient than the former Proof of Work (PoW) mechanism. Research also revealed that the energy loss during mining was drastically reduced by 99% with the Proof of Stake mechanism.
What Happened?
When Ethereum fully transitioned into the Proof of Stake mechanism, the market price appreciated, drastically reducing the ETH liquid supply. The 5th of August 2021 historical crypto event from the London hard fork where EIP-1559 was activated is also a significant contribution to this effect. The event addressed the high congestion rate of Ethereum, making it one of the most significant upgrades in history.
The Ethereum merge did not lessen gas costs or increase transaction fees as some people may have thought. Nevertheless, it remains a good reward system for validators or stakers.
The Ether Futures
Amidst the rapid development that was going on within the Ethereum ecosystem, Ether Futures was recently launched in October 2023. It’s only safe to say that historical crypto events that pushed Ethereum’s popularity could have propelled the release of the Ether futures products. This is because Ether futures is the first futures product that was launched after Bitcoin. As of the time of writing, we haven’t discovered any direct link between the Ethereum merge and Ether futures yet. However, here is what an expert has to say:
What we know is the futures ETFs are here today and what’s important about that is that the regulated futures market resolves a lot of the challenges as the spot market is maturing.
Simeon Hyman, ProShares’ Global Investment Strategist.
El Salvador Adopting Bitcoin as Legal Tender
El Salvador is the first country to adopt Bitcoin as legal tender, and this game-changing historical crypto event, in turn, boosts Bitcoin’s adoption. However, we can’t categorically say this event directly impacted the futures market. In recent news from Binance, it was reported that El Salvador had $83.335 million of bitcoin value in its holdings, which is 20% less than the initial investment. When this event happened in September 2021, El Salvador acquired up to 2.381 BTC.
How This Historical Crypto Event Turned Out for El Salvador
Unfortunately, Bitcoin being used as a legal tender did not turn out well for the El Salvador economy. Since the government adopted the US Dollar as its official currency, it needs approval from the US Federal Reserve to print new notes. However, this event’s significant positive role is boosting El Salvador’s revenue in the tourism sector with an increase as high as 30%.
In an interview with the co-founder of Solus Finance, Nelson Malath, we asked about his perspective on crypto being legal tender in countries, especially since El Salvador’s failure. Here is what he thinks:
El Salvador alone cannot be considered as a deciding factor for the fate of Bitcoin as a legal tender. It would be very interesting to see a nation with very high inherent economic stability accept Bitcoin as legal tender considering that its super volatile nature will have a lesser impact, driving up adoption.
Conclusion
The crypto community often bounces back from an unfavorable historical crypto event, as these traders always find an alternative in several other cryptos. However, adverse events relating to exchange hacks or exposure to cybercriminals may cause significant losses for investors. Unfortunately, not every investor can recover from this type of unpleasant event.
