late 14c., crasen, craisen "to shatter, crush, break to pieces," probably a Germanic word and perhaps ultimately from a Scandinavian source (such as Old Norse *krasa"shatter"), but it seems to have entered English via Old French crasir (compare Modern French écraser). Original sense preserved in crazy quilt (1886) pattern and in reference to cracking in pottery glazing (1815).
Mental sense of "derange the intellect of, make insane" (late 15c.) perhaps comes via the transferred sense of "be diseased or deformed" (mid-15c.), or it might be an image of cracked or broken things. The intransitive sense of "become insane" is by 1818. Related: Crazed; crazing.
... there is little assurance in reconciled enemies: whose affections (for the most part) are like unto Glasse; which being once cracked, can neuer be made otherwise then crazed and vnsound. [John Hayward, "The Life and Raigne of King Henrie the IIII," 1599]
late 15c., "break down in health," from craze (v.) in its Middle English sense of "to shatter, break to pieces." In 16c. also "a flaw, a defect, an infirmity." Perhaps via a notion of "mental breakdown," by 1813 the sense was extended to "mania, irrational fancy, fad," or, as The Century Dictionary defines it, "An unreasoning or capricious liking or affectation of liking, more or less sudden and temporary, and usually shared by a number of persons, especially in society, for something particular, uncommon, peculiar, or curious ..." .