Everything You Need to Know about “Crypto Winter”

Investors in cryptocurrencies have had a terrible year so far. Since their all-time highs, virtually all of these digital assets have fallen more than 50% in value, and there is no imminent rebound in sight as the bear market continues. Crypto investors’ hopes were shattered by the Terra (LUNA) catastrophe last month, but the developing problems at significant crypto lenders, exchanges, and corporations are warning a much more catastrophic collapse is imminent.

As selling activity in several of these tokens has increased in recent weeks, all major cryptos, starting with Bitcoin and Ethereum, are battling to climb. Those who haven’t made any investments in cryptocurrency yet can be better off keeping away from it for the time being. However, for those who have already ventured into crypto, industry professionals recommend a number of measures that can be taken to ensure their success. The present scenario might be likened to the time between 2018 and 2020, which is often referred to in the market as the “crypto winter,” despite the fact that every correction is distinct and is triggered by diverse variables.

What Does It Mean When Experts Talk about “Crypto Winter”?

The price of cryptocurrencies has fluctuated a lot throughout the years. Bears have demonstrated their dominance over the market several times in the past. Price declines of 30% or more from all-time highs are often linked with a bear market. Since the beginning of the year, the majority of cryptocurrencies have lost more than that. The term “crypto winter” refers to the gloomy mood that has permeated the digital currency sector as a whole. In Game of Thrones, the term “crypto winter” was coined. The timeframe suggests that turmoil is brewing in the cryptocurrency sector.

This ‘crypto winter’ has been incredibly damaging for everyone involved in crypto, from investors, traders, and crypto-based companies. Some say the unregulated nature of crypto, unlike what we see with casinos found online, is part of why this huge cryptocurrency crash has happened. So-called ‘Hodlers’ may find it difficult going forward, given the high level of market volatility. Nevertheless, this isn’t the first time the market has seen a period of correction like this. As previously mentioned, Bitcoin’s market value fell by roughly half between 2018 and 2020 before rebounding in November 2021 to hit an all-time high. Crypto winter is nothing more than a prolonged down market, but it is far more complex. P.B. Shelley’s famous poem “If winter arrives, can spring be long behind?” is a reminder of this.

When Is the Crypto Winter Expected to Begin?

Crypto winters endure over long periods of time because of a variety of variables. For example, the Federal Reserve raised interest rates in the first few months of 2022, which had a significant effect in terms of how the crypto market performed. As a result of mid-de-pegging May’s of TerraUSD stablecoin, the market fell into a downhill slide from which it has not yet recovered. The de-pegging of the TerraUSD stablecoin in mid-May sparked a fall in the price of BTC, which had been consolidating since early April. This was its worst level since December 2020, when the Celsius controversy brought it to a low of US$18,000 in June. In light of recent developments that have dragged down the price of BTC, the market is interpreting this as a warning that crypto winter has arrived.

What Are the Benefits of This Period?

Everything seems like it’s taking off for the moon while the market is going up. Prices are more likely to be discovered and corrected during a down market. Strong projects are forced to build and verify their goods, while weak ones are filtered out by crypto winters. This specific stage may be a stepping stone for those cryptos which can make it through to the spring rejuvenation phase. Investors who want to buy additional cryptocurrencies at low prices during crypto winter can take advantage of this chance. However, before making a final investment choice, it is critical to do a thorough study and analysis. During a bear market, almost everything is on sale. Investment in random coins may be enticing because of the potential for exponential profits. That, though, is a rookie move.

It’s a Bear Market, But Is Crypto Winter Like That?

A market in which cryptos, stocks, or even equities are underperforming is referred to as a “bear market.” Users nonetheless use the term “crypto winter” to describe a period in the crypto market during which prices are much lower than normal. A large majority of cryptos are vulnerable at this time. As a result, during crypto winters, investors should prepare for a general decline in the market.

To help you cope with the volatility, realize that dips are a typical part of the investment process. Here are a few pointers by experts to get you through these trying times:

·     Money that you cannot afford to lose in investments should not be put at risk.

·     DCA or Dollar Cost Averaging may help you weather a downturn in the stock market.

·     To prevent panic selling, it is necessary to remain calm and composed.

·     Markets in decline often move quickly and furiously.

Investing in cryptocurrencies is a risky but potentially rewarding endeavor. As a result, you should only invest money that you can lose. Investing in real estate is no different from investing in any other kind of asset: it takes time and patience to work your way through the various stages. Crypto winter is a standard component of the asset’s market cycle and nothing to be concerned about. But bear markets aren’t the only thing that happens in the crypto world. There is a long history of stock market values rebounding. Even though the cryptocurrency market has been known to be turbulent, it has always recovered. And made a tremendous comeback. Before making an investment choice, it is necessary to do thorough research. If you’re a long-term investor, a SIP or DCA may help you get greater returns with less risk.

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