Bitcoin and several leading digital currencies have experienced heavy price drops in recent days. Many analysts now fear that things are going to get a lot worse, and that a crypto winter may potentially be heading our way.
Analysts Are Worried About a Crypto Winter
On Monday, bitcoin briefly fell below the $33,000 mark, meaning it reached its lowest peak since last July. That was a time when bitcoin was trading below $30,000 – just a few months after hitting a new price point of roughly $64,000 per unit. In the meantime, the entire crypto market is now about $1 trillion less in overall valuation. Ethereum has fallen by more than half since reaching a new price peak last November, while Solana has fallen by as much as 65 percent.
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As a result, fears of a crypto winter are beginning to grow. Many analysts refer to a crypto winter as a major bear market that’s set to last a good while. Several feel that 2022 is likely to bear a lot of similarities with 2018, which saw bitcoin and several other leading digital currencies lose a lot of value after hitting new peaks just a few months before in 2017.
In December of that year, bitcoin had reached an all-time high of nearly $20,000 per unit. From there, however, the currency began to incur a series of drops that less than a year later, left the coin virtually valueless and trading in the $3,000 range. Overall, it’s believed that bitcoin fell by as much as 70 percent over the course of 11 months.
Many think that 2022 is on the verge of bringing bitcoin and several other leading digital assets down to new lows. However, David Marcus – the former head of blockchain at social media giant Facebook – commented that he feels if a crypto winter does arrive, it’s likely to make a lot of digital currency companies improve themselves. He says that during harsh economic circumstances is when many digital currency firms tend to implement new tactics that improve their operations and make them stronger.
It’s during crypto winters that the best entrepreneurs build the better companies. This is the time again to focus on solving real problems vs. pumping tokens.
Maybe Coins Are Just “Cooling Off”
Nadya Ivanova – chief operating officer at tech firm L’Atelier – says that while she doesn’t believe a crypto winter is here, she does think that bitcoin and many leading cryptocurrencies are entering cooling off periods given how strong 2020 and 2021 were. She says:
Over the last year — especially with all the hype in this market — a lot of developers seem to have been distracted by the easy gains from speculation in NFTs (non-fungible tokens) and other digital assets. A cooling off period might actually be an opportunity to start building the fundamentals of the market again.