Will the crypto market reach the bottom during the crypto winter?

Cryptocurrency is experiencing massive downturns that began after reaching its peak in November 2021.

According to Coinmarketcap, the total market value lost two-thirds of the value, falling from $ 3 trillion to under $ 1 trillion June 13th. Bitcoin (BTC) suffered a loss of 13.6% in 24 hours, and drops to a level it has not seen since December 2020. Ether (ETH) fell 18% in the same period.

The state of cryptocurrency has led many companies to implement significant budget cuts, often in the form of massive layoffs, to survive the crash and meet their financial problems.

CEO of Coinbase – Cutting Workforce

The CEO of Coinbase – one of the most well-known cryptocurrency exchange companies – announced on June 14 that they will cut the workforce by 18% June 30, citing the economic crisis and claiming that the company was growing “too fast”.

Coinbase CEO Brian Armstrong attributes the recent fall of crypto to the US “entering a recession after a 10+ year economic boom” in a blog post sharing the message first sent to Coinbase employees on June 14.

Will the recession lead to another crypto winter?

He added that a recession could lead to another “crypto winter”, a phenomenon that most likely got its name from the popular – and now infamous for its gloomy last season – HBO series “Game of Thrones”. In the series, “winter is coming” is a motto which means that lasting danger and conflict can come to the kingdom at any time and without any warning.

Will Crypto fail or thrive?

This is a sufficient metaphor to describe a cryptocurrency crash, as the volatility and risk of cryptocurrency means that it has the potential to fail – or thrive – at any time. During a crypto winter, trading revenues fall significantly and remain low for an extended period – usually a massive fall after a huge peak.

Coinbase is not the only platform that announces recent layoffs during a potential cryptocurrency. Gemini confirmed the resignation of around 10% of employees also. In the announcement that was shared with employees, which was later posted on the blog, Gemini’s CEO and President Tyler and Cameron Winklevoss say, “… as painful as this moment is, we finally see it as an opportunity to double our strongest ideas and customer-centric products. “

Past cryptocurrency and causes

The last crypto winter lasted from January 2018 to December 2020 and started with a Bitcoin crash.

Many causes, national and international, can spur a crypto winter. In the US, rising inflation rates drive rising interest rates, which drastically affects crypto in the potentially largest market. Global events, such as the Russia-Ukraine conflict, are causing financial turmoil and are also affecting the cryptocurrency world.

Cryptocurrency is problematic for investors and companies

Cryptocurrency is problematic for investors and companies, but especially for newcomers who are unsure of what their next move should be or whether they should continue to invest and trade at all.

Experienced traders make recommendations on social media platforms such as Reddit and Twitter, and encourage traders to first find out what they are willing to lose. CoinGecko co-founder Bobby Ong even encouraged longtime holders of Bitcoin and Ether to go away to “go for a jog, ride a bike, go for a walk,” and say, “the market will still be here.”

Regardless of a person’s role in cryptocurrency crash, the current state of the market is disturbing. However, there are some benefits to a crypto winter.

Benefits of a crypto winter

While this crypto winter is not a welcome change, it is certainly not the first time investors have experienced it.

A crypto winter allows more established companies to prove their products to the public while weeding out new startups with unsustainable models. This is an ideal time for investors to easily identify the best places to put their money.

An incredible period of growth after the last crypto winter persisted through most of 2021. There is no way to say if things will trend that way this time around, but many investors think it’s worth the risk to endure it.

Newcomers during the crypto winter

Some investors see the current market situation as another reason to “double down” and hold it out for long-term results.

Still, for many, joining the crypto world now seems like a move that is guaranteed to fail. However, there have been many updates in the crypto world that involve analyzing the risks associated with it. It is difficult to know much about what will happen, but a few things are certain.

Crypto is becoming more regulated.

Yes, Crypto is becoming more regulated. The US government, after one executive order signed by President Joe Bidenwill to a greater extent regulate the risks and benefits of cryptocurrencies in the form of six factors: consumer protection, financial stability, illegal activity, US competitiveness, financial inclusion and responsible innovation.

Crypto is also becoming more mainstream, with various companies open to accepting crypto as a form of payment.

Where is the setback?

More regulation backfires, but it also means crypto is becoming more legitimatewhich can offer some security for new traders.

However, gaining access to the crypto market is not always a good thing. Cryptocurrency is full of risk, which means that traders need to understand the possible consequences they may face by joining.

Where is the risk in Crypto?

It’s easy to see the risks involved in crypto now, but when the market is doing well – as it may be when this crypto winter thaws – it will be harder to see them.

People who are new to crypto or interested in trading need to do research to get as much knowledge as possible before investing. They need to focus on possible losses first and foremost so that they stay focused on realistic goals. When developing a financial strategy based on the information they gather, they should stick to it.

Finally, do not get stuck believing that crypto is the same as other markets. It is not. It will be more advantageous to make smart trading decisions instead of buying and holding stocks as in a more classic market.

The future of crypto

It is difficult to predict the future of crypto. It is essentially impossible to make forecasts, given the volatile economy. That’s what Binance CEO Brian Shroder says says it’s fine with crypto: “It literally ends next week, or we can be in it for over a year plus.” The company made headlines recently when it was exposed to the layoff trend, and hired 2,000 open roles on June 15, the day after Coinbase announced layoffs.

The stronger cryptocurrencies will stay afloat

Most experts seem to agree that the stronger cryptocurrencies will stay afloat. Some are betting that cryptocurrency will be revived when the economic crisis subsides and use the cryptocurrency winter as an opportunity to buy Bitcoin at a discount.

Investors need to decide if they want to ride the wave with established companies and longtime investors or jump off now. As with anything in investment, people need to do their homework, follow their gut feeling and hope for the best.

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