What Is Crypto Winter and How to Survive It

If you’re a crypto enthusiast, you have probably heard of the term crypto winter — but do you know what crypto winter is? This term refers to the period of decline in the value of cryptocurrencies. There have been several crypto winters so far. Crypto winters can be caused by several factors, from lack of regulation to security hacks.

If you want crypto winter explained in detail, check out our comprehensive guide in which we’ll talk about the causes and history of crypto winters. We’ll end our guide by giving you some tips on how to survive a crypto winter.

What Is Crypto Winter?

The crypto winter meaning refers to a period in which investors and crypto exchanges witness a continuous decline in the value of cryptocurrencies that lasts for at least three months. Crypto winters don’t only affect major digital currencies, such as BTC and ETH, but also other altcoins and even stablecoins.

Crypto winters can be compared to bear markets, as they have certain similarities. However, crypto winters do not have a specific metric. This makes it difficult to determine when exactly crypto seasons begin or end.

What we know is that the crypto winter often occurs after the crypto industry experiences a bull run. With that in mind, the main indicator that there could be a crypto winter is the decline in the value of crypto assets.

Cryptocurrencies are highly volatile, and changes in their price is not something unexpected. However, if the value of cryptocurrencies stays low for a long period, it could lead to a crypto winter.

Moreover, when there is a significant drop in the prices of major cryptocurrencies, such as Bitcoin, this trend is often followed by other altcoins and stablecoins.

What Causes a Crypto Winter?

Factors that can cause a crypto winter are:

• Market crashes — When markets crash, many investors panic and start selling their crypto coins and tokens. This leads to a lack of demand, and a lack of demand equals lower prices.
• Inflation — Inflation leads to an increase in interest rates. High interest rates often distract investors from making risky investments, such as trading crypto assets. This leads to low trading volume.
• Government regulations — Changes in the regulation of cryptocurrencies often affect market sentiment.
• Security breaches — Sometimes major security hacks can lead to crypto winter as investors will lose confidence in crypto exchanges.

Crypto Winter vs Bear Market — What’s the Difference?

Crypto winter and bear market are similar in many ways. Namely, both indicate a decline in the value of digital assets or stocks. However, a bear market indicates a drop in stock prices by 20%, while crypto winter has no specific metrics.

Another factor that differentiates these two terms is related to prices. During the crypto winter, the prices won’t only go down, they’ll also remain low. This means that investors will see flat returns. On the other hand, since the prices are only dropping in a bear market, investors will see negative returns.

Moreover, the average crypto bear market length is 289 days, while crypto winter can last much longer.

Crypto Winter History

The history of crypto winter dates back to 2013, when the first significant drop in the value of cryptocurrencies took place. Namely, at the beginning of the year, the BTC price increased in value only to drop by 80% at the end of the year. The reason for this sharp decline was related to the hacking of the exchange platform Mt. Gox.

Due to this incident, many investors stopped investing in cryptocurrencies, which caused their prices to drop. In fact, it took almost three years for the crypto market to stabilize again.

How Many Crypto Winters Have There Been?

There have been three crypto winters so far:

• The Mt. Gox Incident (2013–2014)
• Great Crypto Crash (2017–2018)
• Cryptocurrency Bubble (2020–2022)

The 2013 incident was the first indication of crypto winter. However, this term was coined in 2018 after the Great Crypto Crash. The Great Crypto Crash began in 2017 and lasted until the end of 2018.

After the price of BTC experienced a huge boom in 2017, its value fell by 65%. The BTC crash caused other currencies to fall in value as well. This ultimately caused the value of all digital assets to fall by 80%.

The third crypto winter began in 2020 when the price of BTC dropped by 50% within 2 days due to the pandemic. The situation improved significantly after the Bitcoin halving when BTC experienced a peak. However, the crypto giant witnessed another crash at the end of 2021, when its price went down by 30%.

How Long Will Crypto Winter Last?

For a crypto winter to occur, digital currency prices must be in decline for at least 3 months. If we look at the history of crypto winters, we can assume that they last from 1 to 2 years. This is longer than bear markets, which usually last 9.5 months.

However, these are just speculations, which means that crypto winters can last much longer. Namely, crypto winter is not declared by regulatory bodies. Moreover, there are no metrics that determine the exact start and end of crypto winters.

Is crypto winter over? We can’t know for sure. However, the situation in the crypto market has improved significantly, which could lead to the arrival of crypto spring.

How to Survive the Crypto Winter?

There is no way to know for how long will crypto be down. Yet, there are a few things we can do to survive the crypto winter.

Invest Responsibly

Invest only as much as you can afford to lose. Give preference to crypto projects with wide use cases and altcoins that show potential for high returns. Moreover, avoid buying volatile assets, such as coins with small trading volumes. Instead, opt for stable options, like BTC and ETH.

Diversify Your Portfolio

By creating a diversified portfolio, you’ll reduce the risk of significant losses. You can start by investing in both large-cap and small-cap digital assets and DeFi projects.

HODL

The term hodling refers to holding cryptocurrencies when their value drops. However, you should only use this technique if you have reasons to believe in the project’s success.

Invest in Utility Tokens

If you want to avoid a painful billion-dollar loss as crypto winter bites, you should invest in utility tokens. Why? Because they have real-world use cases.

For example, utility tokens can be mined and used to buy goods and pay for services. On the other hand, meme coins have little utility, which is why their price rises only during bull markets.

Conclusion

Crypto winter is a term that refers to a drop in the price of cryptocurrencies that lasts for a longer period — at least 3 months. So far, there have been three major crypto winters.

Since the crypto market is very volatile, we cannot know just how long will crypto crash last. However, we know that certain factors can cause crypto winter, such as inflation, changes in government regulations, and major security breaches.

There are several things investors can do to survive the crypto winter — from diversifying their profile to investing in utility tokens and holding.

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