Since the collapse of stablecoins in early May, all eyes have been on Bitcoin (BTC). This is a key figure for the cryptocurrency market, and before the big downdraft earlier this week, the price of BTC was struggling to stay close to the psychological $28k mark. But Bitcoin isn't the only one feeling downward pressure. Ethereum (ETH) and other leading altcoins such as Cardano (ADA) and Polygon (Matic) are all down less than 60% year-to-date.
Tyler and Cameron Winklevoss, CEO and president of Gemini, announced in a blog post in June that the industry was entering a contraction they called 'crypto winter'.

What actually is crypto winter?

The phrase 'crypto winter' probably originated from the hit HBO series Game of Thrones. In the show, the motto of House Stark is "winter is coming". It is seen as a warning that the land of Westeros could be in permanent conflict at any moment. Similarly, a long period of turmoil in the crypto market can be resolved. In this difficult time, you must remain vigilant and prepare for the chaos that will sweep the market without much warning.

Defining the phrase more literally, crypto winter is a time when prices drop and stay low for a long period of time. Analysts believe that the wheels of the emerging crypto winter are already in motion in 2022.

Advantages of crypto winter:

The last crypto winter lasted from January 2018 to December 2020, according to EasymarketsEasymarkets. The term was probably first used in 2018, when Bitcoin lost more than half of its market capitalisation and other cryptocurrencies such as Ethereum and Litecoin (LTC) fell significantly.

We know from this experience that crypto winter is like a typical bear market and the results are not much different from bear markets in other asset classes. For a long time, cryptowinter eliminated young startups and presented an opportunity for leading companies to mature and prove their products.

When does crypto winter start?

Analysts say that crypto winters usually start when there is a sleep selloff from high bitcoin prices. BTC hit a 52-week high of $68,990 in November 2021 before beginning a long decline. Over the past seven months, Bitcoin has experienced heavy losses, falling nearly 70% from November 2021 to mid-June. The latest stretch comes amid the Celsius scandal.

The original cryptocurrency bounced back from its 52-week low and was trading at around $22,600. Ethereum, the second largest cryptocurrency, is down 74% since its peak in November at the time of writing. Experts said expectations of further monetary policy from the Federal Reserve exacerbated June's decline and that institutional investors were pushing for selling. All investors who bought bitcoins last year will experience a loss as the original crypto fell.

Will crypto rise again?

When it comes to predicting the future of the crypto market, most experts say that 'stronger cryptocurrencies' will prevail. "I don't expect cryptocurrencies to come back like they did in 2021 because the tailwind from the Federal Reserve's monetary policy has turned into a headwind for the asset class," Johnson said, adding that despite the headwinds, it still looks like we're set.

The cryptocurrency market rose from the ashes. However, some investors love the move and see it as a time to double down on the market for the long term. With bitcoin trading at around $30k, a little less than half of its 52-week high, investors see it as an opportunity to buy at a discount. They are banking on resurgence in cryptocurrencies once the global political and economic crisis settles down.
 

 

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