Crypto winter can be one of the most unnerving times in a cryptocurrency investor's life. Fortunately, they're not all winters of our discontent, and so far, all crypto winters have come to an end eventually. Read on to learn more about this phenomenon.
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Definition
What is a crypto winter?
Cryptocurrency trading first launched with Bitcoin (BTC -0.22%) in early 2009, so everything we know about crypto and its patterns is only about 15 years old at this point. Even so, the phrase "crypto winter" has been developed to describe times when cryptocurrencies and tokens take a huge, across-the-board hit in value.
This is generally due to long-term negative sentiment. The value that cryptos have to shed to be considered in a crypto winter is unclear, but if we follow the rule of thumb for bear markets, it would be about 20%. As time goes on, these benchmarks will be more firmly established with historical data.
Signs it's happening
Signs of a crypto winter
Although crypto is fairly new compared to other serious types of investments, there are a few signs that a crypto winter is happening:
- Decreased institutional interest: Although there are many small traders involved in the world of cryptocurrency, it's understood that there are major institutional investors in this arena, too. When they start to sell their coins or simply show less enthusiasm for common cryptocurrencies like Bitcoin and Ethereum (ETH -0.6%), there may be a crypto winter just around the corner.
- Falling crypto prices: Crypto prices are extremely volatile, so a change in price isn't really too alarming unless crypto prices start to trend downward over a long period of time. The colder the market gets, the more people will dump their holdings or at least stop actively trading, which can cause a freeze.
- Less crypto activity: Less trading activity is generally indicative of a crypto winter. This is a type of investment that trades constantly, around the clock, around the world, and never stops. If you start to notice that prices are changing more slowly or that trade volume is decreasing, it may indicate that crypto holders are bracing for impact or have already decided to put their holdings on ice until things get better. Too much of that, and you'll find a crypto winter begins.
Crypto winter vs. bear market
Crypto winter vs. bear market
Although a crypto winter is a time of extreme value loss for cryptocurrency markets, it's not the same as a bear market. When a crypto winter strikes, it strikes only the crypto markets, causing them to chill and maybe even freeze for a period of time. There's no set definition of a crypto winter, except that many experts say you'll know it when you see it.
As for a bear market, you can expect to see stock prices drop at least 20% from a recent high. Bear markets are part of the regular stock market cycle and have been recorded over so many years that they are easier to understand. They do not cause crypto winters, and crypto winters don't cause them, although external factors can cause both to happen at the same time.
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Causes of a crypto winter
Causes of a crypto winter
We're still trying to really get a good feel for crypto winters and how they work, but it's generally understood that several destabilizing factors can cause crypto markets to tip into winter territory.
Crypto investors are dealing in an all-or-nothing type of investment. If things are bad, they can go really bad really quickly since there are no business assets to sell that can offset investor losses. When investors lose their confidence, they pull their money from crypto markets, causing them to stagnate or deflate considerably.
Things that might cause a lack of confidence in high-stakes investments like crypto would include global political destabilization, like the war in Ukraine, and major global economic downturns, such as the Great Recession.
Remember that crypto -- unlike stock markets -- is a global market that is constantly trading across the planet. This means that local blips may not cause problems, but widespread global issues can freeze the market.
Kristi Waterworth has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
FAQs
bear market. Although a crypto winter is a time of extreme value loss for cryptocurrency markets, it's not the same as a bear market. When a crypto winter strikes, it strikes only the crypto markets, causing them to chill and maybe even freeze for a period of time.
What crypto did Motley Fool recommend? ›
The Motley Fool has positions in and recommends Bitcoin, Coinbase Global, and Ethereum. The Motley Fool has a disclosure policy.
Which crypto has 1000x potential? ›
Being a project that stands out for several reasons, EarthMeta could potentially be the next 1000x in crypto space. Since the project integrates AI with the Metaverse, creating a decentralized digital world, it allows users to own, govern, and interact with virtual cities and assets, providing a unique experience.
What coin will skyrocket in 2024? ›
Top 10 Cryptos in 2024
Coin | Market Capitalization | Current Price |
---|
Ethereum (ETH) | $422 billion | $3515 |
Binance Coin (BNB) | $87 billion | $595 |
Solana (SOL) | $66 billion | $143 |
Ripple (XRP) | $27 billion | $0.499 |
6 more rows6 days ago
What is the next cryptocurrency to boom? ›
The next token with the potential to explode in 2024 is Pepe Unchained ($PEPU). This is a meme coin that is built on Ethereum's layer-two (L2) blockchain. Thus, it offers high staking rewards, reduces gas fees, and fast transaction speed.
Which cryptocurrency will reach $10,000? ›
So far in 2024, Bitcoin (CRYPTO: BTC) has attracted much of the attention of crypto investors, thanks primarily to all the buzz surrounding the launch of the new spot Bitcoin ETFs.
What is the best crypto to invest to be rich? ›
- Bitcoin (BTC) Price: $65,737.67. Market cap: $1.3 trillion. ...
- Ethereum (ETH) Price: $3,523.39. Market cap: $423.4 billion. ...
- BNB (BNB) Price: $598.62. Market cap: $88.3 billion. ...
- Solana (SOL) Price: $143.86. ...
- XRP (XRP) Price: $0.50. ...
- Dogecoin (DOGE) Price: $0.13. ...
- Toncoin (TON) Price: $7.78. ...
- Cardano (ADA) Price: $0.40.
Which crypto coin will explode in 2025? ›
Conclusion (Next Cryptocurrency to Explode in 2025)
While predicting which coins will 5X by 2025 is challenging, Ethereum, XRP, Cardano, Dogecoin, Toncoin, Shiba Inu, TRON, Cronos, and NEAR Protocol are among the top contenders with strong potential for explosive growth.
What crypto has the most potential? ›
Long-term investors will view Bitcoin as the best crypto with the most potential. While it's already a trillion-dollar project, Bitcoin's long-term growth trajectory is uncapped. It's the most important crypto in the blockchain ecosystem; its value determines how the broader market performs.
Which crypto has the potential to explode? ›
PlayDoge is being considered as one of the next big cryptocurrencies to explode in 2024. Operating on the BNB Smart Chain blockchain, PlayDoge is a Tamagotchi-inspired project gaining its utility from being a play-to-earn (P2E) game.
Our list of the next big crypto coins to explode in 2024 (x100 Bull Run) :
- EarthMeta ($EMT) – AI-driven Metaverse platform for decentralized governance and digital real estate.
- Folki ($FOLKI) – Meme coin integrating with the metaverse.
What is the best crypto to buy right now? ›
- Best Overall: Bitcoin.
- Best Blockchain Platform: Ethereum.
- Best Stablecoin: Tether.
- Best Utility Coin: Binance Coin.
- Best for Transaction Speed: Solana.
- Best for Global Payments: XRP.
- Best Research-Based Platform: Cardano.
- Best for Scalability: Avalanche.
What is the best crypto to invest long term? ›
Bitcoin (BTC)
The world's first cryptocurrency, Bitcoin, has the largest market capitalization. Its established network, limited supply, and growing institutional adoption make it a relatively safe haven in the volatile crypto market. Bitcoin grew by 155% from the start till the end of 2023.
What are the 10 stocks the Motley Fool recommends? ›
See the 10 stocks »
Mark Roussin, CPA has positions in AbbVie, Alphabet, Coca-Cola, Microsoft, Prologis, and Visa. The Motley Fool has positions in and recommends Alphabet, Chevron, Home Depot, Microsoft, NextEra Energy, Prologis, and Visa.
Which meme coin will explode in 2024? ›
ButtChain stands out among meme coins in 2024 due to its playful branding, innovative features, and genius tokenomics. Auto Liquidity: Automatically directs 20% of presale sales into liquidity pools, ensuring smooth trading from the start.
What is the best crypto to invest in right now? ›
Best Crypto to Buy Now – A Detailed Analysis
- Bitcoin — Best for Long-Term Holding. ...
- Ethereum — Best for dApp Development. ...
- XRP — Best for Cross-Border Transactions. ...
- Solana — Best for Fast and Low-Cost Transactions. ...
- BNB — Best for Paying Exchange Fees. ...
- Dogecoin – Best for Online Gambling.