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What is the crypto winter and how long will it last?

Andy Vilchez
7 min read
Crypto winter would be here according to Coinbase.

The cryptocurrency sector is in crisis and everything seems to indicate that the crypto winter has arrived. This is a phenomenon in the market that occurs from time to time and that ends up wreaking havoc on finances, since prices tend to fall and remain "stagnant

This is usually temporary, but depending on how long it lasts, the market may be more or less affected. Today we are going to be talking about what crypto winter is and how long it could last.

What is crypto winter?

This is a phenomenon that causes the price of a coin to crash.

Crypto winter is a market condition when the price of cryptocurrencies drops significantly below its usual uptrend.

For example, in June 2021, the price of 5 famous cryptocurrencies fell in just one week. As a result, many traders began to speculate on the possibility of a crypto winter during that year.

Before the free fall began, Bitcoin still reigned supreme with the largest market capitalization, at $611 billion. However, the price of Bitcoin fell by around 7.5% in just one week. Ethereum was second on the list, falling 14.5% during the same period.

The downtrend was subsequently followed by Binance Coin, losing its value by 14.6%. Tether was probably the least affected among those three coins, as the price of the coin remained almost stagnant.

According to CoinMarketCap, Cardano(ADA), the third largest cryptocurrency by market capitalization, did not miss the trend losing its value by 6.4%.

Fortunately, everyone's fear was not shown. Even after going through that depreciation, Bitcoin never dipped below $20,000.

Of course, this was during the year 2021, but in this 2022, the story is a little different, since we see how the price of Bitcoin has dropped below 20,000 dollars.

According to CNBC, a crypto winter occurs if the price of Bitcoin drops to at least $20,000. Despite the fact that at the moment the price is slightly higher, we can say that we are in a crypto winter, since the trend of the cryptocurrency is still bearish.

Crypto Winter 2021 Prediction

By 2021 the currency was predicted to fall, but it did not.

Bobby Lee, a former CEO and co-founder of a cryptocurrency exchange mentioned Bitcoin 's 4-year cycle to CNBC Asia. According to him, cryptocurrency tends to follow a 4-year cycle rule. In this cycle, the price of Bitcoin skyrockets every four years, as it did in 2013 and 2017. Reflecting on this pattern, he predicted that it would jump again in 2021.

Other analysts and investors also believe that this cycle is still in force. In addition, they also mention that each cycle consists of 4 different phases : exponential price, correction, recovery and continuous rise.

Lee predicted that Bitcoin could reach $300,000 by the end of 2021. After going through 10 rallies, he believed that the price of the coin would fall based on the movements of the previous two bullish phases. However, the prediction was not fulfilled until the last second of 2021.

Crypto winter prediction in 2022

This 2022 we have seen an even greater crash of cryptocurrencies.

Contrary to public expectations, the price of Bitcoin (BTC) did not rise in early 2022. The coin even fell below $40,000.

This significant drop brought with it the consequent loss for some large cryptocurrency investors, including MicroStrategy.

In addition to Bitcoin, two other cryptocurrencies – Binance Coin (BNB) and Ethereum (ETH) also underperformed in early 2022. With three major cryptocurrencies underperforming this year, the public became concerned that the crypto winter story would unravel. I would repeat this year.

At that time, it was predicted that this phenomenon would begin this year and it is already very close to happening. The market capitalization has fallen to its lowest in recent years and the price of Bitcoin is very low. Even looking at the charts, the price has already dropped below 20,000 at times. At the time of writing this note, the price of the cryptocurrency stands at $20,280 per unit.

How long does crypto winter usually last?

This year 2022 is the candidate for this phenomenon to arrive.

According to CNBC, a cryptocurrency winter can last between 2-3 years. Some experts, such as Benjamin Cowen, still doubt the accuracy of Bitcoin's 4-year cycle and whether it is still relevant.

He believes that the Bitcoin price cycle will not always happen once every four years. It could happen sooner or later, depending on the ever-changing market demand and supply.

The truth is that this is somewhat unpredictable, it is practically impossible to determine how long each cycle will last. Cryptocurrencies are extremely volatile, so it would take a crystal ball to know.

When was the last crypto winter?

The last time this phenomenon occurred, Bitcoin lost around 70% of its price. This happened in the year 2018, exactly four years ago.

The entire year was probably a nightmare for Bitcoin traders and investors as the price of the coin fell beyond their expectations. In addition to pushing the price of the coin down, the crypto winter of 2018 also kept the price of Bitcoin stagnant, if not pushing it lower until April of the following year.

What to do to avoid losing everything in this phenomenon?

When an event like this occurs, there are only two things that can be done to try not to lose money. And it is that when you invest in these cryptocurrencies, you must be clear that you can win or lose and that the market is very changeable.

Among the things you can do to protect your investment we have the following:

1. Change your cryptocurrencies to stablecoins

Stablecoins are a great way to keep your investment with the least amount of loss. There are many of these currencies on the market such as USDT, BUSD, USDC, among others.

The way this works is quite simple, you have to change your volatile coins to stable coins when the drop occurs. Suppose you have a BTC, and its value starts to fall, when it is at 30,000 dollars you exchange it for USDT, so you will keep those 30,000 regardless of whether the price continues to fall.

Then you will have two options, accept your loss and withdraw that 30,000 or continue investing. For example, if you sold at that price and the BTC drops to 20,000, you will be able to buy 1.5 BTC and if it drops further, you can buy more. When it goes back up, you can get to multiply your money.

2. HODL

When we talk about this it is simply waiting, if you could not change and you refuse to accept the loss, it only remains to wait for the crypto winter to end and the coin to rise again. Of course, it is not known exactly how long this may take, it could be 1 or 3 years, it is very difficult to predict.

This is a strategy that many people follow, especially those who invest for the long term. At the moment, the BTC has been doing cycles, so if the trend continues, this will be temporary.

Of course, we also have the psychological issue, since many people tend to panic and end up selling their coins.

Are we entering a crypto winter?

This is one of the questions that many people ask themselves and the truth is that everything seems to indicate that it is. We have even seen how companies like Coinbase are suffering the havoc that this is causing.

By definition, crypto winter is here, so you need to start taking the necessary measures to protect your investment.

Responses

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