What is Crypto winter? Crypto winter 2021 is coming?

what is crypto winter
what is crypto winter

The Crypto crash last Tuesday has raised a debate among the crypto community about a crypto winter. So, what is crypto winter, and will crypto winter 2021 happen again? In this article, Tokenize Xchange will go deep into the reasons for the recent crypto bearish trend and some opinions from experts to help you answer those questions.  

what is crypto winter
Let’s go deep into the reasons for the recent crypto bearish trend!

What is crypto winter?

Crypto winter refers to the worst period of the market when crypto prices including Bitcoin and other digital currencies are stuck at a low level following a bearish trend. This phenomenon often appears in the middle of the crypto long-term downtrend. 

A significant example of crypto winter is the crypto price crash happening in 2018 when Bitcoin fell 65% from January to February 2018. Back then, the market cap of Bitcoin fell below $100 billion for the first time since Oct 2017 while Bitcoin price dropped below $4,000 (equal to an 80% decline from its peak). 

crypto bear market 2021
Crypto winter refers to the worst period of the market

Subsequently, all altcoins that had reached their ATH in 2017 followed Bitcoin’s collapse. Most cryptocurrencies plummeted by 80% from their peak in January 2018. 

>>>Read more: 3 crypto portfolio trackers<<<

Crypto bear market 2021

On Sep7th 2021, El Salvador became the first country in the world that accept Bitcoin as a legal tender, driving some other countries to follow their step. This historic event was predicted to positively impact Bitcoin price. However, things did not happen as they were supposed to. 

what is crypto winter 2021
 El Salvador became the first country to adapt Bitcoin as legal tender

Bitcoin price dropped by 15% after a few days. Ethereum, the second-largest crypto after Bitcoin, lost 20% of its value, following by other large cryptocurrencies like Solana, Cardano, Ripples, Matic, etc. 

Consequently, Riksbank Governor Stefan Ingves and Bank of Mexico governor Alejandro Diaz de Leon, the two high-profile central bankers warned that Bitcoin and Altcoins might be at risk of collapsing and are not “a good safeguard of value”.

>>>Read more: 5 things you need to know before buying Cardano<<<

crypto winter 2021
Bitcoin price dropped by 15% after a few days. Source: Coinmarketcap

Said Edward Moya, a senior market analyst at Oanda Corp., “Social media platforms were very cautious over the weekend that a plunge could occur following El Salvador’s big day,” According to him, some investors might buy in when El Salvador implemented its Bitcoin law back to Sep7th, and then moved to “sell the fact”. 

However, according to David Gerard via Associated Press, the author of “Attack of the 50 Foot Blockchain”, the recent Bitcoin volatility seemed to have nothing to do with El Salvador. “My first guess was shenanigans because it’s always shenanigans,” said Gerard. 

To explain the reasons for the recent crypto crash, he said “That sort of price pattern, where it crashes hugely in minutes then goes back up again, is usually one of the big guys burning the margin traders.” Since Bitcoin is so thinly traded, it could be some big traders selling, making the market strongly volatile. 

Crypto winter 2021 is coming? 

It has been a debate in the crypto community about whether or not the crypto winter 2021 would happen like the crypto winter 2018 when the price fall dramatically and stayed low for years. 

According to Jason Deane, an analyst at Quantum Economics, it seems not to be a beginning of a so-called crypto winter but the overreaction which will correct itself later. 

Said Mati Greenspan, portfolio manager and Quantum Economics founder, we may no longer see any crypto collapse since there the market of 2021 has a lot more utility, adoption, and diversification compared to the 2018 period. The crypto bulls in 2021 are much stronger than they used to be in the last crypto collapse in 2018. 

You already understand crypto winter meaning. Do you think crypto winter 2021 will ever happen? Don’t hesitate to share your opinion with Tokenize Blog and keep following us for more updated crypto information!

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