Familiar with crypto winter? You should know more!
The concerns regarding the decline of crypto are rising, and people have started preparing for the crypto winter. As per the latest data, around 18% of Coinbase employees have become unemployed due to layoffs, click here. According to the CEO, the company showed rapid growth during the phase of the Bull Market, but an impending recession is on its way.
In May, Stablecoin crashed, and now people are looking toward Bitcoin. It is an alarming bell for the crypto market, and before coming down sharply this week, the prices of Bitcoin are struggling to stay close to the psychological level. Bitcoin, which is tradable via Bitcoin Trading Software, is not only the case Ethereum and other leading cryptocurrencies are also experiencing downward pressure.
What is meant by crypto winter?
The term “Crypto Winter” might be derived from the season “Game Of Thrones” as one of its chapters is named “Winter Is Coming.”, which is an indication that something unfavorable is about to come and that might last longer. The same is the case with the crypto market, in which a longer period of trouble might exist.
In such a tough time, you must be eagle-eyed and be ready for the havoc that may unfold in the market. Bluntly speaking, a crypto winter is when the prices shrink and stay low for a long time. According to the analysts, the emerging crypto winter wheels began to move in the earlier period of the current year.
In what way the crypto winter is beneficial?
The crypto winter has not taken over the market for the first time. Last time, it lasted for two years, and at that time, this term came into being when Bitcoin lost about 50% of its market capitalization, and other cryptocurrencies like Ethereum and Litecoin suffered severe recession.
From this experience, we can relate crypto winter to the traditional bear market in which the consequences of other asset classes are not too different from the bear market. Blooming start-ups have been wiped out by long-term crypto winters, and high-end companies are being allowed to strengthen and validate their products.
Why the crypto winter is worrisome for the executives?
Businesses are raising concerns about the dropping prices of crypto assets because it will result in low investment and less trade volume, and they will not be able to make money. It means that the companies will try to cut and minimize their cost, and laying off employees is a suitable option for them. Coinbase, a leading crypto company, has stopped new hiring and cutting off the already employed individuals to reduce costs.
The current market fluctuations are not that big, and that is why when the market gets down, most companies do not sack 20% of their employees. Although cryptocurrencies are more volatile than any other asset, you might see companies attached to these currencies expand and shrink more.
Crypto winter from investors’ point of view
The current fluctuations in the crypto market should not alter your broader portfolio perspective. You need to have a strategy based on a diverse portfolio of stocks & bonds and possibly crypto assets, where you have to think carefully about asset distribution.
Experts generally recommend that cryptocurrencies be a small part of your total portfolio, between 1-5%, and that you invest only as much as you can afford to lose. It is not the best time to invest in cryptocurrency. People who are investing now; must be having long-time beliefs as crypto is involving potential risks now along with the rewards.
Be careful not to have plenty of stocks with your employer, especially when they are working in a highly fluctuating industry.
Will crypto roar again?
Experts believe that strong cryptos will lead the market. Some specialists say that it will not roar again the way it did in 2021 while others prefer pullbacks and see it as a time for the market to double in the long run. Bitcoin is being traded at just under half of its 52-week high, and it is an opportunity for the investors, and they are grabbing it by purchasing it at discount. After resolving the global political and economic crisis, they are banking on crypto revival.