And then she comes – her majesty crypto-winter. And like with a normal winter: it will be cold, and uncomfortable and you will try to hide somewhere in the palms and jungle, but you can’t, because there’s an opportunity you just won’t be able to afford it.
Ok, it was overly dramatic, but I tried to draw your attention because we are observing the most inconvenient market situation for cryptocurrencies ever. And that’s just the beginning. Stable coins are dropping dead one by one, bitcoin is going down dragging all your hard-earned wealth, and traders try to fugue out what to do to continue living their best life provided by your commissions. I’d wanted to say that there’s no need for panic, just drink green tea and do your positive affirmations, but we’ve kinda richer the point when yoga might not work at least for those who invested a lot.
To decide what to do and how to act we need to dive deep into the history of Bitcoin’s raises and falls and we are starting from the very beginning of the crypto success – December 2017 – the first ICO boom. It was the year of tech thriving and crypto was raising its head.
We knew about Bitcoin, mining, and crypto before, but 2017 opened Pandora’s box with projects, companies, and startups taking advantage of the concept of leveraging cryptocurrencies. And eager to catch the trend multiple companies decided to reinvent themselves: add the words «crypto» or «blockchain» in the name. The marketing trick was extremely successful: Riot Blockchain In formerly known as Bioptix Inc raised its market cap from $68.6 mln to $266.6 mln in three months just because of renaming. And that’s not the only example.
The same year Bitcoin reached its high of $20.000, but instead of spurring its popularity it actually attracted scams and failing projects to the industry creating a reputation of uncertainty and instability. Moreover, the launching of Bitcoin-based fitters on CME threatened the market and investors started shorting bitcoin en mass.
It was more than enough for the price to drop but additionally, there were rumors that Asia, including China and South Korea, is gonna ban crypto trading. And if you’ve read Ugly Americans by Ben Mezrich (and if you haven’t you should) then you know that what Asia says – the world follows so the Bitcoin price collapsed 65% reaching $7,700. The amount of money lost by investors started an 18-month-long crypto winter in 2018.
Interest in the crypto market came back in 2019 with a bitcoin price of $10.000, but then in 2020 COVID came and crushed the market. The threat of another crypto-winter was flowing in the air, but thanks to the «amazing» Biden’s monetary policy and the idea of printing an extra 80% USD, the danger was prevented. Bad for everyone else, but good for crypto, because from now on the finance area that seemed like the least reliable came up as a very solid solution for investing, saving, and trading. In just six months price of BTC rose 134%.
2021 – the year of ultimate blossoming.
Do you remember when bitcoin was almost $70.000? It was in 2021, the year when everyone started thinking «Oh no, it might be I’ve missed something important! Let’s buy some bitcoin right now, cause soon it will be $120.000!». It wasn’t, but the whole situation felt so promising, the conditions were so enabling, that it felt like nothing can ruin Bitcoin’s prevalence. And slowly we are moving to the current situation.
It was the last throwback, I promise.
The 2022 – the reality. And it’s quite simple. We have war in Ukraine and difficult (yes, I intentionally use that word) international relationships with Russia, we are under the threat of a food crisis, and let’s not forget we still didn’t fully recover from the pandemic’s consequences. Inflation has reached the bottom definition for the last fifty years and the market is falling into recession. But does it mean that crypto is dying and all the ill-wishers were right? You’d better be investing in gold?
Spoilers – not really. The Terra situation put a lot of pressure on the crypto market and scared unfaithful. But it’s not a niche group of isolated networks anymore. Four years ago we were dealing with a relatively new industry, so the first crypto winter could easily become the last one. But now crypto-environment attracts 2.5 million users daily, and experienced investors’ portfolios now include at least 10-15% of crypto (but in reality, we are talking different numbers). The interest in the industry is too strong to be defeated too easily.
Is it constantly growing? No, it doesn’t, but what industry does it? The roller coasters help to create financial stability within the markets that will pay off in the long-term perspective. It’s the survival of the fittest – shallow projects created «just for the money» will die, but the strongest ones will blossom.
The crypto winter might be harsh but as we know the hardest times create the strongest warriors. And we are here to fight.