“This is my third crypto winter. There’s been plenty of ups and downs, but I see that as an opportunity,” Fidelity Investments CEO Abigail Johnson told an audience at Consensus 2022 in Austin, Texas. “I was raised to be a contrarian thinker, and so I have this knee-jerk reaction: If you believe that the fundamentals of a long-term case are really strong, when everybody else is dipping [out], that’s the time to double down and go extra hard into it.”
Whenever there’s a crypto market crash, people begin to ask “Are we in the Crypto Winter Already”. Maybe, this is your first time hearing of the phrase “Crypto Winter”, and that’s because you just experienced your first crypto market crash season. Well, in this guide we are going to demystify everything you need to know about Crypto Winter, and why it’s important in the crypto space.
Crypto Winter Meaning
Crypto Winter refers to when crypto prices fall and stay low for an extended period of time. Bitcoin has dropped around 55% year to date and sits at around $21k per coin as of when this article is been published.
Crypto Winter History
By 2017, cryptocurrency went mainstream. Bankers and financial analysts actually started to take note of it. Retail investors became bullish. But there were still plenty of folks who poo-pooed the idea that this sort of digital currency could ever truly catch on. All the while, the price of Bitcoin and Ethereum (ETH) soared.
The price of a Bitcoin rose from $900 to just shy of $20,000 over the span of less than a year. You couldn’t turn on the news without someone talking about the stuff. Crypto was the talk of the town. But as it went mainstream, a whole lot of early adopters read the writing on the wall. It was time to cash out. And thus, hundreds of crypto millionaires were minted.
Crypto was so popular in late 2017, that some companies doled out Bitcoin to their employees for holiday bonuses. But the timing wasn’t ideal with a crypto winter around the corner.
The crypto winter lasted from January 2018 to December 2020. The term was probably first used in 2018 when Bitcoin lost more than half of its market cap, and other cryptos, such as Ethereum and Litecoin (LTC), dropped sharply. Back then, the market cap of Bitcoin fell below $100 billion for the first time since Oct 2017 while Bitcoin price dropped below $4,000 (equal to an 80% decline from its peak).
What Cause Crypto Winter
Analysts say that crypto winters usually begin when there is a steep sell-off from an all-time high in the price of Bitcoin. Other financial and economic factors can also lead to crypto winter, like the FED increasing inflation rate, and a lot more. Simply put when the economy isn’t at its best or when we are experiencing a recession, that could lead us straight into crypto winter.
When is the Next Crypto Winter
Actually, no one can tell when the next crypto winter will fall before us, but with the use of the Bitcoin Yearly Candlestick, we may be able to predict that it occurs every four years interval.
How Long Does Crypto Winter Last
There’s no specific or assured timeframe as to when a crypto winter would last. But then, the last crypto winter lasted from January 2018 to December 2020 when bitcoin crashed as much as 80% from all-time highs and took about 18 months to recover, and the overall market capitalization of crypto assets dropped to less than $1 trillion from its peak of $3 trillion in November.
The Advantage of Crypto Winter
Crypto winter isn’t just characterized as the crash of crypto prices, it also has a positive effect on the crypto ecosystem, and these include:
- Long-term crypto winters filter out weak projects while giving innovative projects a chance to grow and validate their products.
- Helps investors to get a cheap new entry into their favorite cryptocurrency
- The cryptocurrencies that have the potential to survive this period will emerge far beyond their positions before the current market crash.
How Crypto Companies Prepared for Crypto Winter
Companies are showing concerns about a recession, and in the crypto space, many are preparing for a crypto winter.
Coinbase is laying off 18% of its workforce, or roughly 1,100 people, according to an email sent to employees Tuesday morning. CEO Brian Armstrong said the company grew “too quickly” during a bull market and expressed concerns about a looming recession.
Crypto.com CEO also said that the company is laying off 5% (260 people) of its staff.
Bybit crypt exchange laid off a whopping 30% of its workforce that’s about 2,000 workers. and many other crypto firm.
“We appear to be entering a recession after a 10+ year economic boom. A recession could lead to another crypto winter, and could last for an extended period,” Armstrong said in the email. “While it’s hard to predict the economy or the markets, we always plan for the worst so we can operate the business through any environment.”