Crypto Winter: Will the Crypto Market Recover to its Pre-Crypto Peak?

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Written By Nipun Singh

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Cryptocurrency is experiencing massive downturns, which began after its November 2021 peak.

Coinmarketcap reports that the market cap fell by two-thirds, from $3 trillion to under $1 trillion on June 13. Bitcoin (BTC), which suffered a 13.6% loss in less than 24 hours, fell to levels it hasn’t seen since December 2020. At the same time, Ether (ETH), dropped 18%.

Many companies have had to make drastic budget cuts due to cryptocurrency's volatile nature.

Coinbase CEO - Cutting Workforce

Coinbase, one of the most prominent cryptocurrency exchange companies, announced that its CEO had announced that the company would reduce its workforce by 18% starting June 30. He cited the economic crisis and claimed the company grew too quickly.

Brian Armstrong, CEO of Coinbase, attributed the recent fall in crypto to the U.S. entering a recession "after a 10-year economic boom". He shared the message with Coinbase employees on June 14th.

Is the Recession a Sign of Another Crypto Winter?

He said that a recession could cause another "crypto winter," which is a phenomenon that most likely derived its name from the HBO series "Game of Thrones," which is now well-known for its depressing finale. "Winter is coming" is a motto that signifies that the kingdom could be in permanent danger or conflict at any moment.

Is Crypto going to fail?

This metaphor is adequate to describe a crypto crash. Crypto's volatility means it can fail or thrive at any moment. Crypto winter is when trading revenue drops significantly and stays low for a long time -- often a large drop after a peak.

Coinbase isn’t the only platform that has announced layoffs in the wake of a possible crypto crash. Gemini also confirmed that approximately 10% of its employees were being dismissed. Gemini President Tyler and Cameron Winklevoss said, "... despite the pain, they see this as an opportunity to expand on our best ideas and customer-centric products.

Previous Crypto Crash and Causes

The last crypto winter ran from January 2018 to December 2020. It began with a Bitcoin crash.

A crypto winter can be triggered by many factors, both national and international. Increased inflation rates in the United States drive higher interest rates. This has a profound impact on crypto's largest market. Global events such as the Russia-Ukraine Conflict can cause chaos in finance and have a profound impact on crypto.

Investors and businesses are concerned about crypto winter

For investors and businesses, crypto winter can be a problem. But it is especially problematic for newcomers who aren't sure what to do next or if trading and investing should stop altogether.

Reddit and Twitter are full of recommendations from experienced traders. They encourage traders to first determine how much they are willing to lose. Bobby Ong, the co-founder, and CEO of CoinGecko encouraged long-time holders of Bitcoin and Ether "to go for a run, cycle, hike" because "the market will still exist."

The current market state is alarming, regardless of who was involved in the cryptocurrency crash. There are some advantages to crypto snow.

The Advantages of a Crypto Winter

Although this crypto winter isn't a welcome one, it's not the first time that investors have seen it.

The crypto winter gives more established companies the opportunity to demonstrate their products to the public, while also weeding out unsustainable startups. This is a great time for investors to quickly identify the best places where to invest their money.

The incredible growth period that followed the last crypto winter continued through most of 2021. Although it is impossible to predict if things will continue this way, many investors believe that sticking it out will pay off.

Newcomers during the Crypto Winter

Some investors view the current market state as a reason to "double down" and persevere for long-term success.

Many people still believe that joining the crypto-world is a risky move. There have been many updates to the crypto world that include analyzing the potential risks. Although it is difficult to predict what might happen, there are some things that can be certain.

Cryptocurrency is increasingly regulated.

Yes, Crypto is being more tightly regulated. After President Joe Biden's executive order, the U.S. government will regulate cryptocurrencies more closely in six areas: financial stability, consumer protection, financial instability, U.S. compatibility, financial inclusion, and responsible innovation.

Many businesses are now open to accepting cryptocurrency as a payment method.

Is there a backlash?

While regulation can lead to backlash, it also means that crypto is becoming more legitimate, which could provide some security for new traders.

Accessing the crypto market can be dangerous. Cryptocurrency comes with a lot of risks. Therefore, traders should be aware of the potential consequences.

What’s the risk with Crypto?

While it's easy to see the risks involved in crypto right now, seeing them when the market is performing well -- as it might be after this crypto winter thaws - will be harder.

If you are interested in trading or learning more about crypto, it is important to do your research. To avoid losing money, they must first consider possible losses. This will help them stay on track with their realistic goals. They should adhere to the financial strategy they have created based on the information that they have gathered.

Don't let yourself get caught up in the idea that crypto is the same market as other markets. It's not. Smart trading decisions will be better than buying and holding stocks in a traditional market.

The Future of Crypto

It is difficult to predict what the future holds for crypto. Given the volatility of the economy, it's difficult to predict the future of crypto. Binance CEO Brian Shroder said that this is what crypto is all about. "It literally ends next weekend or we could stay in it for over one year." This was the reason why the company made headlines when it deferred to the layoff trend and hired 2,000 positions on June 15, just days after Coinbase announced its layoffs.

The stronger cryptos will stay afloat

Experts agree that stronger cryptos will be able to stay afloat. Many are betting on cryptocurrency's revival after the economic crisis passes. They are also using the crypto winter to buy Bitcoin at a discounted price.

Investors need to decide whether they want to join established investors and long-term investors, or if they prefer to jump ship now. People need to do their research, listen to their gut, and trust their instincts.

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