The scary term refers to a sharp drop, followed by a drop in trading and months of market stagnation, a phenomenon that memorably hit the cryptocurrency market in 2018.
The price of Bitcoin plunged by more than 80% to a low of $3,100 from late 2017 to December. of the following year, a period marked by the rise and fall of initial coin offerings and several major banks abandoning plans to launch cryptocurrency trading desks. Bitcoin won’t hit a new high until December 2020.
Memories of 2018 raise fears it may be repeating itself now after the world’s largest cryptocurrency plunged 50% from its last high of nearly $69000 in November. The cryptocurrency universe has lost over $1 trillion in market value on growing belief that the Federal Reserve is about to start reviving the ultra-accommodative policy settings that fueled a boom in risky assets. . The pullback has affected every corner of the crypto ecosystem, from Bitcoin to meme coins and from publicly traded cryptocurrencies to exchanges. While the crash was strong enough on its own, it raised even more concern that the pain could linger for many months, according to UBS.
“There’s this question of how do we characterize that, and the nearest analogy is probably 2018, which is this idea of a crypto winter,” James Malcolm, head of foreign exchange research at UBS, said by phone. “It looks likely to be a fairly difficult and potentially prolonged period and therefore, the crypto winter analogy is quite good. Remember, the crypto winter in 2018 wasn’t just over the Northern Hemisphere winter months. It basically extended for a whole year — so it was a crypto winter that lasted effectively a year.”
On Tuesday, bitcoin slipped further, falling as much as 3% to trade at $35,721. The coin has spent over 60% of the year trading lower so far, recording only nine sessions in the green. Mentions of “crypto winter” and “crypto ice age” have flooded social media amid the recent slump. “Gm gm make sure you stay warm crypto winter is in full swing,” the Twitter user posted. User @brycent_ on Monday using the crypto shorthand for “good morning” to start his tweet “Enjoy this #bitcoin winter,” user @mir_btc tweeted over the weekend.
There is definitely a chill in the air for Antoni Trenchev, co-founder and managing partner of Nexo. Bitcoin is already halfway through its definition of a crypto winter in two parts: a sharp price drop. Winter’,” he said. “No doubt regulatory and macroeconomic storms are brewing and further extension to $28k-$30k cannot be ruled out in the current climate of risk aversion.