Crypto Crash and Crypto Winter Explained

Jul 4, 2022

Written by:
John McDowell

Crypto crash and crypto winters: what are they?

Crypto crash and crypto winter are both terms used to describe a period of time when the prices of cryptocurrencies take a significant hit. Both of these events are caused by a number of factors, including increased supply, regulatory uncertainty, scams, and fraud.

However, there are a few key differences between the two terms. For one, crypto winters last much longer than a crypto crash. Furthermore, a crypto winter is characterized by a slow and steady decline in prices, while a crypto crash is more sudden and erratic.

Additionally, a crypto winter usually sees a number of high-profile projects shut down and staff layoffs, whereas during a crypto crash most projects are able to weather the storm.

Despite these differences, both the crypto winter and the crypto crash have a major impact on the cryptocurrency industry, causing many investors to lose faith in digital assets.


crypto crash Definition

A crypto crash is a sudden, sharp decline in the prices of cryptocurrencies. Crypto crashes can be caused by a variety of factors, including hackers, government regulation, and changes in market sentiment.

They can also be triggered by so-called "whales" - large investors who sell off their holdings and cause a sharp drop in prices. Crypto crashes can be extremely damaging to the market, wiping out billions of dollars of value in a matter of hours or days. They often occur with little warning and can leave investors scrambling to sell their assets before prices plummet even further.

Crypto crashes are a reminder of the risks associated with investing in cryptocurrencies and underscore the need for caution when buying or selling digital assets.

Why is crypto crashing?

Let’s be honest, in 2022 it was a rough sea to sail even for the most skilled crypto sailor. Crypto investors experienced a harsh crypto crash and there are a few possible explanations.

  1. One reason could be that the original adopters of Bitcoin and other cryptocurrencies have started selling off their holdings to take profits due to global instability.
  2. Another possibility is that the market has become overheated and it is simply time for a correction.
  3. Finally, it could be that government regulation is starting to have an impact on the market.

Whatever the reason, the 2022 crypto crash has had a major impact on the industry. Prices have dropped sharply and many people have lost money.

However, some strong believers and analysts think that this could be a chance to buy cryptocurrencies at a discount.

Will crypto survive a crash?

Crypto has seen a lot of ups and downs since the inception of the idea and the start of Bitcoin. Crypto went through another recent winter in 2018 after the 2017 bull run. But the question is, will it survive another crash after 2022?

There are a few things to consider when trying to answer this question. First, it's important to understand what caused the last crash. While there are many theories, the most likely cause was a combination of over-exuberance and FOMO (fear of missing out). Investors were buying up crypto without really understanding what it was, and when the prices started to drop, they panicked and sold en masse.

With time, investors become more sophisticated and should have a better understanding of what they're buying. That doesn't mean that prices won't drop again - but it does mean that there could be less chance of another panic-driven sell-off.

In addition, the underlying technology of blockchain is stronger than ever. More and more businesses are starting to adopt it, and while crypto prices may fluctuate in the short term, the long-term sentiment looks positive.

So while no one can say for sure whether crypto will survive another crash, it looks like it has a good chance based on the adoption of the technology.

Lastly, it is worth noting that smaller crypto projects without a very good structural model and small market cap are more likely to fail and experience a crypto crash. In contrast, larger and more established projects like Bitcoin and Ethereum are perceived as more powerful and more stable, hence less likely to go to zero.

When is the next crypto crash?

In June 2022, the time of writing this article, we are probably living the “next crypto crash”. However, there have been many historical crashes and crypto winters:

  • 2011 when Bitcoin rose to $1.06 and then fell to $0.67
  • 2013 when Bitcoin catapulted to $1,127 and then slowly declined to $172.15 by January 2015
  • 2017 was the year of the crypto boom
  • 2018 was the biggest crypto crash ever recorded (aka Bitcoin Crash or Great Crypto Crash) when the price of Bitcoin tumbled by 65% in just a month, and by February it lost 80% from the peak of January.
  • 2022 Bitcoin lost 56% from January to June and the crypto crash at the moment seems to involve all the other cryptos from the same market.
    • Back in may the crypto crash destroyed TerraUSD (UST) and its sister Luna which failed and went to zero.
    • Even Ethereum is being brought low. The crypto created by Vitalik Buterin lost around 70% of its value in 2022.

Crypto crashes are notoriously difficult to predict. While there are often warning signs before a major drop, it can be hard to tell when the time is right to sell. For many investors, the strategy of choice has been to simply ride out the downturns and wait for the market to rebound. However, this approach is not without risk.

Crypto markets are highly volatile, and a crash can happen at any time. As such, it's important to be prepared for a potential loss. If you're thinking about investing in crypto, be sure to do your research and develop a solid investment plan. And remember, always invest only what you can afford to lose.

What causes crypto to go down?

On a purely financial level, as per any other asset, the market is regulated by supply and demand. If demand increases faster than supply then prices go up. In reverse, if the supply is higher than the demand, there will be more offers in the market bringing prices down.

If the selling supply is higher than demand then prices can go virtually to zero. In a worst-case scenario, you can see bankruptcy, unemployment, and a massive drop in hardware prices (since miners would need to sell them to recover their money).

Is crypto dead?

2022 was a tough year for crypto. After reaching dizzying heights in December of 2021, prices came crashing down in January, with many major coins losing over half their value. This crypto crash caused panic among investors and raised serious doubts about the future of crypto. However, it's important to remember that crypto has been through tough times before and has always bounced back. So while the current situation may be discouraging, it's important to keep an eye on the technicals. Crypto may be down at the moment, but the time to buy usually comes when no one else wants to buy. While prices are down, learn how to spot reversal patterns like the inverse head and shoulders pattern or other trading strategies.


What is a crypto winter?

Crypto winter is a period of time when the prices of crypto assets drop significantly and remain low for a long time. It is similar to a bear market in the stock market. This can be caused by a number of factors, including regulatory uncertainty, hacks, and scams.

It can be difficult to determine, as there is no set definition, for how long prices need to remain low in order to be considered a crypto winter. However, most people agree that a crypto winter starts when the prices of major cryptocurrencies start to fall and stay below their all-time highs for an extended period of time. If compared to a bear market, this would be at least 20% off the highs.

For example, the crypto winter of 2018 started when the price of Bitcoin fell from its all-time high of $19,783 in December 2017 to its lows of around $3,200 in December 2018. During this time, the prices of most other cryptocurrencies also fell sharply. While crypto winters can be difficult for investors, they also present opportunities to buy cryptocurrencies at bargain prices.

As the saying goes, "buy low, sell high." So, if you're thinking about investing in crypto assets, a crypto winter may be the perfect time to do it.

When is the next crypto winter?

For crypto enthusiasts, the big question on everyone's mind is: when is the next crypto winter? As we have seen before, a crypto winter is a period of time when the price of Bitcoin and other cryptocurrencies plummets and remains low for a long time.

The last crypto winter occurred in 2018, when the price of Bitcoin fell from around $20,000 to just $3,200. This lasted until 2020 when the pandemic lit a fire under all asset classes, even stocks.

In 2022, we experienced a similar trend: the crypto market crashed, with Bitcoin going from around $60,000 in 2021 to around $20,000 (-66.70%).

One reason for this is that many institutional investors have pulled out of the crypto market. Another reason is that global economic uncertainty could lead to a decrease in demand for Bitcoin and other digital assets.

How often does bitcoin go through a crypto winter?

Bitcoin has come a long way since it was first created in 2009. In the past decade, the crypto winter has come and gone several times. Each time, bitcoin prices have plummeted, and investors have been left feeling burned. However, bitcoin has always bounced back, reaching new all-time highs within a few years.

So, how many times has bitcoin crashed? By our count, there have been four major crypto winters since 2009. Each time, prices have fallen by more than 80%. However, bitcoin has always recovered and gone on to reach new highs. So, while the crypto winter can be painful for investors, it appears that history could repeat itself and bitcoin will eventually bounce back. But there is no guarantee.

Bitcoin has undergone several "crashes" since it was created in 2009. The first crash occurred in June 2011, when the price of a single Bitcoin dropped from $32 to $2 in just a matter of days. This was followed by a second crash in August 2012, 700,000 bitcoins being stolen in 2014, and then again in December 2013 when the crypto dropped around 50% of its value. More recently, Bitcoin suffered from what is known as crypto winter that began in early 2018. However, the price of Bitcoin can experience several sharp rallies, including one that took it above $60,000 in 2021.

While it is impossible to predict when or how often Bitcoin will crash in the future, these past events show that the cryptocurrency remains highly volatile. Based on past data we might assume that bitcoin goes through a crypto winter on average every 1.71 years and so far we have experienced 8 crypto winters.

How long does crypto winter usually last?

The asset depreciation during the crypto winter is usually caused by a combination of factors, such as a general decline in interest from investors and an increase in regulation from governments or market uncertainty. However, crypto winter doesn't appear to last forever, and the market eventually starts to rebound. You might think of them as market cycles.

So how long does crypto winter usually last?

There is no set answer, as crypto winter can vary in length depending on the circumstances. However, most crypto winters tend to last for around one to four years. During this time, prices may fall by as much as 80% before starting to rebound. After crypto winter ends, the market typically experiences a period of rapid growth known as a bull run. While crypto winter can be difficult for investors, it may be temporary for the more stable cryptos like Bitcoin and Ethereum. Thus far, the market has rebounded and prices begin to rise once again.


Tags: Crypto


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