There is quite some chaos in the crypto world at the moment. It wasn’t that long ago when all the crypto companies were heavily engaged in promoting themselves during the Super Bowl. But, the scenario as of now is not very appealing. Many cryptocurrencies are plunging, and the big names in the industry are even announcing layoffs.
Just because everything seems like a lost cause doesn’t mean that you have to completely lose hope. You have to learn how to survive such conditions in order to attain maximum profits when the market gets back to its original boom.
What Is Crypto Winter?
“Crypto Winter” is the name given to the major crypto market crashes in history. The name is likely derived from the major HBO hit series “Game of Thrones”. The show consists of the House of Stark having the motto “Winter is coming”. This was also considered a warning that the land of Westeros could face the effects of a lasting conflict at any time. In the same way, “crypto winter” refers to a time when the crypto market seems to be having trouble.
According to the analysts, crypto winter begins when there is a steep sell-off from the all-time high price of Bitcoin. Up until now, two major crashes have been witnessed. The first crypto winter happened in 2014 when Bitcoin went from almost $1137 in November 2013 to gradually $183 (by 84%) in 2015. And the second is currently being observed. It began around November 2021, and as of this writing, the crypto market has dropped by 60% (approximately $3 trillion to $1 trillion).
Now Let’s Understand Why The Market Is So Down Lately
The market is bleeding red, not only in the case of crypto but also for stocks and other assets. Consumer prices are increasing at the highest annual rate in four decades, resulting in hiked interest rates by the federal reserves to bring down inflation. These high interest rates lead to increased borrowing costs for companies as well as individuals. All these raise concerns about the economic recession too.
Its Impact On The Crypto Industry
Financial markets are all facing trouble, and the crypto market is also not spared. Big companies are announcing layoffs, halting withdrawals to reduce the impact of crypto winter on them. However, larger investment institutions are still continuing their projects with a long-term plan in mind.
Individuals who have invested in crypto, especially the beginners who joined the market thinking it is the financial future, are re-evaluating their plans and trying to figure out how to manage their losses.
Is Crypto Winter Really Bad News?
“Crypto Winter” is often compared to the conventional bear market due to a lot of similarities in their results. Long lasting crypto winters present opportunities for top companies to prove their products and weed out young start-ups. It is no secret that market contraction brings bad news for companies and individuals, but now a lot of companies have their safety gears on. Thus, proper management of crypto winters can also bring incredible growth once they end.
Will Crypto Be Able To Make A Stronger Come Back?
The answer to this question is not definite. Some professions believe that stronger cryptos can always make a comeback. Some investors expect cryptocurrency to rise from the ashes, whereas others are loving the pullback as they view it as a period to double down on the market.
Conclusion
Crypto winters feel like a scary concept, but once you get a hold of it, you will get the hang of it. Every financial market gets hit by such unforeseen events. In such situations, you need to keep your cool and play the game strategically to avoid any serious losses.
