Crypto winter is when cryptocurrency values decrease and remain low for a long time. It has been the subject of speculation for a few months. You must maintain vigilance during this period. Get ready for sudden destruction in the market.
With a decline of almost 55%, now the bitcoin price is up at $20,000. The value of Bitcoin reaches at $69,000 per coin in November, decreased by over 70%. The market value of all cryptocurrencies has dropped to less than $1 trillion from $3 trillion in November. In June, bitcoin price rises over $31,000.
2017 & 2018 saw the most severe crypto winter, during that time, bitcoin saw a drop of up to 80% from all-time peaks and lasted 18 months to get back. Meantime, cryptocurrencies faced the economic downturn this week. The value fall to almost 23% as of Friday afternoon. A crisis may be on the horizon, according to experts.
How Long Does The Crypto Winter Last?
According to analysts, crypto winter often coincides with a sharp sell-off from a record high in the price of Bitcoin.
In November 2021, BTC reached a 52-week high of $68,990 before beginning a protracted decline. Bitcoin has suffered significant losses over the past seven months, falling by roughly 50% between November 2021 and mid-June. The Celsius affair coincided with the most recent run down. From its 52-week low, the Bitcoin cryptocurrency has made some ground and is currently trading at about $22,600. As of this writing, Ethereum, the second-largest cryptocurrency, has decreased by 74% from its peak in November.
According to experts, the June market crash is becoming worse. It is because of high inflation, interest rates, and changes in Federal Reserve monetary policies. Given the decline in cryptocurrency, any investors who bought Bitcoin in the previous year will have suffered a loss. In the crypto winter 2018, the price of Bitcoin had dropped from a peak of around $19,500 in 2017 to less than $3,300 in 2018, a drop of at least 80%.
Crypto as a Risky Investment
The Federal Reserve injected extraordinary amounts of wealth into the capital markets in the end of 2020 and early 2021. It caused the crypto markets to skyrocket.
As a result, the crypto sector saw a significant period of hypergrowth in 2021. In addition, thousands of new crypto projects were introduced. From the beginning of last year’s till second half, that rapid growth period sustained.
In the coming months, there will be more crashes, withdrawal bans, and price downturns. The businesses and investors who made wrong decisions can be severely hit by the market crisis. When the crypto industry grew in the previous years, a number of new currencies were launched.
What Would Be The Consequences Of This Crypto Winter?
An economic winter has descended over the cryptocurrency industry before, so, it’s not the first time investors are facing crypto winter. From January 2018 through December 2020, there was a previous crypto winter. The phrase was presumably first used in 2018, when other cryptocurrencies, including Ethereum and Litecoin (LTC), as well as Bitcoin, saw significant price drops.
From that history, we understand that the crypto winter resembles a traditional market crash and that the outcomes aren’t all that unlike from those of bear markets in other asset classes. Long-term crypto winters eliminate inexperienced businesses and provide leading enterprises a chance to develop and validate their offerings.
Does Crypto Still Have Potential?
Investors see a chance to purchase Bitcoin at cheap price when it trades at approximately $30,000, just under half its 52-week peak. Once the international economic and political crisis hits, they are counting on a cryptocurrency resurrection.
Although we don’t really understand what it will be in 10 years, most intelligent people think that the blockchain technology that powers cryptocurrencies has enormous promise. Investors have been investing heavily in Web3 (decentralized internet) projects and getting tokens in exchange because they trust it. They are also looking for cheapest NFTs to buy because they have generated enormous profit. But during the past few months, the value of every one of these assets has been wiped off.