This Crypto Winter Will Be Long, Cold and Harsh
In previous bear markets, people wondered if digital currencies would rebound. Now, they wonder if even the blockchain will survive.
The CryptoPunks can’t be very happy these days.
Photographer: Dia Dipasupil/Getty Images
Bitcoin and other cryptocurrency assets are notoriously volatile, routinely suffering large drops of 50% or more. This doesn’t seem to bother the diehard believers in crypto too much, who have become used to declines of this magnitude. They simply use the declines to buy more. Even so, there are still a lot of people in the space who remember “crypto winter,” the period between early 2018 and mid-2020 when prices went down and stayed down, and much of the innovation in crypto came to a halt.
So, the question is: What do we make of the recent gyrations in the space, with the Bloomberg Galaxy Crypto Index down some 60% from its peak in early November? Does this mark the beginning of a new, long winter after a short spring or is it just a pause that refreshes? Although the selloff in crypto may not be as big as others in its history, it feels worse because the market has grown so big -- to the trillions of dollars in size. The damage in crypto has been broad, with hundreds of coins having plunged by some 90%. Bitcoin, the biggest and most well-known of the cryptocurrencies, hasn’t done as bad, but is still down a painful 56% from the peak.