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The bitcoin crash of 2022: Terra, FTX and a 77% fall from the top

In November 2021, bitcoin hit about $69,000. A year later it was near $15,500, and one of the world's biggest crypto exchanges had collapsed in a week. For many customers, the scariest part wasn't the price. It was finding out their coins weren't there.

Story · 8-minute read · Updated 2026-10-21

The world before the crash

2021 was a huge year for crypto. Prices soared. Celebrities promoted exchanges in TV ads. New coins launched every week.

On about 10 November 2021, bitcoin hit a record near $69,000.

Many people didn't hold their coins themselves. They kept them on exchanges or with crypto "lenders" that promised high interest. That felt convenient and safe. It turned out to be the biggest risk of all.

What happened

The fall came in waves through 2022.

Wave 1: rising rates

As inflation climbed, the US Federal Reserve began raising interest rates in March 2022. Risky assets, from tech stocks to crypto, fell. By the spring, bitcoin had already lost about half its value.

Wave 2: a "stable" coin that broke

TerraUSD (UST) was a stablecoin, a coin meant to always be worth $1. Unlike many stablecoins, it wasn't backed by dollars in a bank. It relied on a sister coin, Luna, and a system of incentives to hold its price.

In May 2022, UST slipped below $1. Holders rushed for the exit. Within days, UST was worth a few cents and Luna was close to worthless. Tens of billions of dollars in value vanished.

Wave 3: the lenders freeze

The Terra collapse hit firms that had lent and borrowed heavily against crypto.

• In June 2022, the crypto lender Celsius froze customer withdrawals. It filed for bankruptcy in July.
• The hedge fund Three Arrows Capital couldn't repay its loans and was ordered into liquidation.
• The broker Voyager Digital filed for bankruptcy in July.

Customers who had parked coins with these firms couldn't get them out.

The moment everyone remembers

By autumn, one name still looked strong: FTX, a giant exchange run by Sam Bankman-Fried.

On 2 November 2022, a news report showed that Alameda Research, a trading firm also founded by Bankman-Fried, held much of its value in FTT, a token FTX itself had created.

On 6 November, the head of rival exchange Binance said it would sell its FTT. Customers rushed to withdraw from FTX. In a few days, billions were pulled out, and FTX couldn't pay.

Binance briefly agreed to buy FTX, then walked away a day later.

On 11 November 2022, FTX filed for bankruptcy. Bankman-Fried stepped down.

It soon emerged that customer money had been sent to Alameda and used for its trading and other spending. Bitcoin fell to near $15,500 in late November, about 77% below its peak.

What happened next

• December 2022: Bankman-Fried was arrested in the Bahamas and sent to the US.
• November 2023: A New York jury convicted him on seven counts of fraud and conspiracy.
• 28 March 2024: He was sentenced to 25 years in prison. The judge found customers had lost about $8 billion.
• October 2024: A court approved FTX's bankruptcy plan. Most customers were set to be repaid based on the dollar value of their accounts in November 2022, when crypto prices were near their lows.

Bitcoin itself recovered. It set a new record high in March 2024.

What it teaches

1. Where you hold it matters as much as what you hold

Bitcoin kept working the whole time. What failed were the companies holding people's coins. When you leave money with a broker or exchange, you also take on the risk that the firm fails. That's counterparty risk. Read crypto trading for beginners for the basics of where coins can be kept.

2. "Stable" and "high interest" both carry risk

A coin designed to stay at $1 still broke. A lender paying high interest was taking high risk to pay it. If a return looks easy, ask where it comes from.

3. Leverage and crypto make a fast mix

Crypto often moves 10% or more in a day. With borrowed money, a move like that can close your position automatically. That's liquidation. Check how close yours would be with the crypto liquidation calculator.

4. Size for the drop you can't predict

From $69,000 to about $15,500 is a 77% fall. To get back needs a gain of more than 340%. Try it in the loss recovery calculator, and size each trade with the position size calculator. Our bitcoin market guide covers what moves it.

What it doesn't mean

• It doesn't mean all crypto exchanges are frauds. FTX's collapse was a crime, as the jury found. Many other platforms kept running and paid out withdrawals.
• It doesn't mean bitcoin "always comes back". It did this time. Past recoveries say nothing certain about the future, and many other coins never recovered.
• It doesn't mean getting repaid made customers whole. Being repaid at November 2022 prices was far below what those coins were worth later.
• It's not a reason to fear the market forever. It's a reason to know who holds your money and how much you could lose.

Timeline

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