Not so long ago we were talking about bear and bull markets on our blog. Today we decided to discuss the phenomenon of crypto winter – a prolonged period of stagnation that influences the pricing of all coins and tokens.
The volatility of the crypto industry is almost legendary. While some crypto investors earn huge amounts of money just in a few days (either due to a well-thought investment strategy or because they’re lucky), some traders lose their entire deposits and even more. If you’re looking for useful tips on how to enter a cryptocurrency market and invest in digital assets, check our blog post on crypto risk management.
However, crypto winter, just like the bull or bear market, is about long periods of time. So, what happens on the market? At first, the cryptocurrency prices are decreasing for some time, and, then, the market becomes flat. Crypto prices remain stable and do not move up or down. For crypto investors and traders, it means that they’re losing large amounts because of a price drop. Moreover, they cannot recover their deposits and make any profit because the coins’ value stays the same.
To put it simply, crypto winter is a long period of a bearish market. But what’s the reason for these cryptocurrency price slurps that cause such tremendous decreases in all coins’ value over an extended time?
Crypto winter is associated with the drop in Bitcoin’s price. BTC is the first cryptocurrency built with the help of blockchain technology. All the other coins also use the same technology and, thus, are connected to Bitcoin. As BTC, the major and central coin on the crypto market, is losing its value, all the other tokens behave in the same way because they’re all built on blockchain. For instance, BTC price is falling and, as a result, even the value of much smaller and insignificant altcoins is decreasing as well.
As of now, the cryptocurrency market has only experienced one crypto winter throughout its short history. And, fortunately, we can learn from those conditions and market data to predict and prepare for the coming crypto winters.
The last and only crypto winter happened in 2018. At the end of 2017, BTC reached its maximum value (as of that time) – $19,850. During the next two months, the price has plunged by 70%. All the coins, accordingly, were also losing in value. The last crypto winter lasted for approximately a year and, only in the middle of 2019, BTC started recovering, which also boosted all the other altcoins.
What’s happening now on the cryptocurrency market? Is the next crypto winter coming? These questions bother crypto investors and traders all over the globe because the crypto market conditions are similar to the ones back in 2018.
During the past two months, the BTC price has been steadily falling. At the beginning of April, it was $47,450 and as of the beginning of May, it’s $35,000. No wonder anyone who owns even a small amount of coins is concerned about the next few months and how the value will change. Should they sell or should they buy tokens?
As we’ve mentioned before, the cryptocurrency market is rapidly changing all the time and, unfortunately, it’s difficult to make any accurate or long-term predictions. The only way here is to observe any changes and shifts in tokens’ pricing and react accordingly in a timely manner.
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