There’s plenty of uncertainty prevailing in the crypto market. The Russia-Ukraine conflict, which caused financial turmoil around the world, weighed heavily on the cryptocurrency market. In addition, rising interest rates in the U.S. – the largest market for crypto – have caused a massive drop in prices. As a result, the market has shrunk by 60% in just over three months. Its market cap is now less than $1 trillion.
In early 2022, Ethereum and Bitcoin Coin under performed cryptocurrencies, sending the public on a panic. Some investors started wondering whether the story of crypto winter would ever come to an end. Nevertheless, they recalled the crypto winter of 2017 which started with the cryptocurrency boom, and defined the current crisis as the start of a new cycle. As a result, these investors have come to believe that the crypto market goes through cycles.
There are several factors that contribute to the development of a “crypto winter.” One of the most common factors is the regulation of the crypto industry. Legal issues can force investors to leave the industry, which results in a downward trend in the market. Another major cause of crypto winter is people’s enthusiasm for the industry. For example, the amount of NEM coins stolen from Coinbase amounts to $530 million. Furthermore, cryptocurrency prices are also affected by the level of enthusiasm of people, which could decrease the market’s volatility.
What is a crypto Winter? It is the time when prices of all the major cryptocurrencies are at an all-time low. The prices are falling and no one knows when the trend will end. This is similar to a bear market on Wall Street, where investors can lose a significant amount of their capital, but mature companies have the opportunity to prove their products and services. A crypto winter could also prove to be beneficial for those who want to invest in cryptocurrency by selling short.