In the crypto market, a black swan event signifies any event that has a significant and unexpected widespread impact on the entire market. The term originates from the Black Swan Theory developed by statistician and trader Nassim Nicholas Taleb; such an event happens outside of regular expectations, is highly unpredictable, and can have an extreme impact on the financial market.
In its short period of existence, the highly volatile market of cryptocurrencies has experienced several black swan events. The price of Bitcoin, Ethereum, and other altcoins have crashed and rallied several times due to such events impacting the market.
One of the recent examples of a black swan event in the crypto market is the crash of Terra LUNA 1.0 and the UST stablecoin. The crash of one of the top 10 cryptocurrencies by market cap in May 2022 came unexpectedly and caused losses worth hundreds of millions of dollars to investors. It also had a spillover effect across the market, scaring away investors, especially from the DeFi market.