Crypto Winter is a term used to describe a period of prolonged volatility in the cryptocurrency market.
Investors must pay full attention during this tough phase and be ready for pandemonium to sweep the market without notice.
Simply put, cryptocurrency winter occurs when prices fall and stay low for a long period of time. The gears of the coming crypto winter, according to experts, were set in motion previously in 2022.
The term “crypto winter” is credited to the famous series “Game of Thrones.” In which the House of Stark’s motto is “Winter Is Coming,” implying that the land of Westeros could face long-term strife at any time.
This isn’t the first time the market has experienced a crypto winter. From January 2018 to December 2020, there was a crypto winter.
The word was most likely coined in 2018, when Bitcoin’s market cap plummeted by more than half and other cryptos, such as Ethereum and Litecoin (LTC), plummeted as well.
Crypto winters, according to analysts, normally begin with a sharp sell-off from an all-time high in the cost of Bitcoin.
Bitcoin lost roughly 55% of its value year to date and now trades at around $21,000 per coin. It’s fallen 70% from its all-time high of $69,000 per coin, set in November 2021.
From a high of $3 trillion in November 2021, the total market capitalization of crypto assets has declined to less than $1 trillion.
Crypto winter has businesses concerned that when the price of crypto assets falls, investors will reduce their trading activity, which is how enterprises make money.
As a result, businesses must find ways to cut costs, such as by downsizing their employment. Coinbase joins a growing list of cryptocurrency startups, such as BlockFi and Crypto.com, who have lately announced recruiting suspensions and then job cuts to slash costs.
The great news, according to experts, is that present crypto instability should not affect an investor’s overall portfolio plan.
Investors should have a framework in place that includes a broad portfolio of equities, bonds, and possibly crypto assets, as well as capital budgeting that has been thoroughly considered.
Experts also recommend that you keep crypto to a modest percentage of your overall portfolio, between 1% and 5%, and that you only invest as much as you’re willing to lose.
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