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Winter is coming – cryptocurrency market frozen in anabiosis

When will crypto winter be over in 2022? How long will crypto winter last and what should investors prepare for? How long does crypto winter last given that digital assets have been falling for months? If crypto winter has arrived, is all the accumulated and earned cryptocurrency already worthless? The flow of such questions has overwhelmed not only specialized forums, but also social networks, becoming a regular feature of news feeds. 

The cryptocurrency market faced an unprecedented drop in quotations, and the most impatient analysts rushed to proclaim the collapse of the cryptocurrency bubble. So, crypto winter 2022 – what should businesses, investors and ordinary people expect?

Crypto Winter

Is the cryptocurrency market in a deep dive?

The term “crypto winter” itself pretty accurately describes the current situation, although it is not canonical. In fact, it really is crypto winter – harsh, hard, snowy. 

When will crypto winter 2022 end, if you want an answer based on facts rather than emotion? Is the cryptocurrency market today, “here and now” a monolithic mountain of ice, or is the spring font already breaking through?

Analysis of the cryptocurrency market without claiming sole possession of the truth:

  • Changes in cryptocurrency rates over 24 hours. Shows that 7 out of 10 cryptocurrencies went up. Even just a little bit, but they grew. Therefore, it is possible to say that crypto winter has come, at least with reservations.
  • Changes in cryptocurrency rates over the week. All digital assets are growing in the top 10 ranking, if we take into account the top 50, only 4 coins went down.
  • Changes in cryptocurrency rates for 30, 60 and 90 days. Yes, things are bad here, and cryptocurrency market news confirms it. If there were no 24-hour and weekly change data, we could agree that crypto winter 2022 has arrived. But if we consider the positive dynamics in the last timeframe, the question how long crypto winter 2022 will last (at least until the end of the year) does not seem so convincing anymore.
  • Changes in cryptocurrency rates since the beginning of the year (YTD parameter). Yes, things are bad here. The market showed a 50-70% drop – this is a fait accompli. TOP-10 coins (bitcoin, ether, XRP) and second-tier tokens lost a lot in value. TerraClassicUSD (USTC, 73rd position in the rating) was a kind of market anti-record – minus 94.88%. Only UNUS SED LEO (LEO, 17th place) token was able to strengthen, but this is rather an exception to the rule. The cryptocurrency market (its small part, 13-15 coins) was able to strengthen a little or stay “at their own”, the other cryptocurrencies either fell or collapsed. This is the sad data that cryptocurrency market analysis as of the end of the day on July 8, 2022.
  • Stablecoins. Today’s cryptocurrency market news is such that it’s figuratively better not to read it at all. The only exception to the rule is stabelcoins. There are several of them in the top 10 in terms of market capitalization – Tether (USDT), USD Coin (USDC), Binance USD (BUSD). Their rates are kept at the same level with minor fluctuations. This means that investors believe in cryptocurrencies and are not going to “sink” alternative dollars.

Based on the data we have, we can’t say exactly when the crypto winter of 2022 will end. But the fact that winter won’t be forever, and that there are signs of improvement, is clear right now. The cryptocurrency market news as of the day of writing says just that. So don’t rush to “bury” bitcoin, stabelcoins and cryptocurrencies in general. They will still show what they can do!

Key Cryptocurrency Market Developments

To understand how long the crypto winter of 2022 will last, we first need to sort out the events that have “frozen” cryptocurrencies or affected their popularity in any noticeable way. It is quite difficult to do this, because it will take some time to understand the importance of a particular event. Therefore, please treat the information with a certain amount of skepticism.

The cryptocurrency market today and in the near future:

Bitcoin has been falling steadily since the beginning of 2022, with virtually all other cryptocurrencies “supporting” it (steibcoins are a partial exception). The market is starting to rush.

Miners and hodlers begin to leave the cryptocurrency market.

The hope of the year – the project STEPN (GMT token).

Massive and elaborate hack of Ronin Network blockchain, losses – more than 173 thousand ETH and 25 million USD (in stabelcoin USDC).

Early May was the collapse of stablocoin. Not only bitcoin, but also ether and altcoins were under strong pressure then.

Rari Capital pools were hit, with losses of USD 80 million.

The sensational fall of the entire Terra ecosystem (terraUSD, UST) and the decoupling of the UST token from the USD triggered losses of 60 billion USD in the cryptocurrency market.

The bankruptcy of hedge fund Three Arrows Capital.

Cryptocurrency exchanges announced layoffs and hiring freezes. Coinbase, Gemini and ByBit were particularly notable. At the same time, shares of cryptocurrency exchanges fell.

The term crypto-winter (crypto-winter, devolution) was coined by the Winklevoss brothers (Cameron Howard Winklevoss, Tyler Howard Winklevoss / Cameron Howard Winklevoss, Tyler Howard Winklevoss) in June.

The cryptocurrency market has imposed tough sanctions against Russia.

Such news of the cryptocurrency market today gives no reason for optimism and actually sends the cryptocurrency market into a deep dive. But it is important to understand that crypto winter 2022 is not a coincidence, but a systemic problem caused by the influence of many factors. And how long the crypto winter will last will depend on the “mood” of the market, not the willful decisions of individuals or states.

Crypto Winter, Season 2

It’s no secret that the term crypto-winter is taken directly from the HBO series Game of Thrones. But in the case of the cryptocurrency market, such comparisons have every reason, because the problems in Westeros were already evident in the first series, when the white walkers appeared. With cryptocurrencies, the story is similar.

But in our real world, there were no walkers. The chain of events that gave birth to CryptoZima 2022 didn’t begin yesterday, or even in 2022 itself. Its roots lie much deeper, largely in speculative demand for cryptocurrencies, lack of clear and unambiguous market regulation, inconsistency of national regulators and many other events and phenomena.

According to many analysts, the immediate root of the problems is the growth of interest rates in the U.S., which is known to be the biggest player in the cryptocurrency market. When the interest rate effect triggered a shift from quantity to quality,” TerraUSD and Luna simply couldn’t help but collapse because they were too tied to U.S. dollars. The cryptocurrency market could not pull itself together and a domino effect occurred, destroying high rates and collapsing almost all cryptocurrencies at once.

Therefore, it would be a mistake to say that crypto winter 2022 started this year. In fact, the starting point was November 2021, but few interested parties will want to understand the chronology of events. It is much more important to understand when crypto winter will end and the market will start to “recover”.

Moreover, the cryptocurrency market has already had a similar experience. The situation, which now, with the lighter hand of the Winklevoss brothers, was generically called crypto winter, was also in 2018-2020. At that time, bitcoin, stabelcoin, and altcoin lost more than half of their market capitalization, leading some “connoisseurs” to talk about the beginning of the end of the cryptocurrency market.

Crypto winter 2018-2020 was explained by the bear market, which happens with any assets, not only with cryptocurrencies. But it is unlikely that this fact can “revive” the crypto market, which is currently in a deep freeze. We need more effective and efficient methods than references to “ordinary” assets.

But some experts believe that crypto winter 2022 is a positive (!) factor and all negative news of cryptocurrency market today is nothing more than a hype. There is some logic in this opinion – crypto winter should weed out weak and unpromising startups, which will help clean up and ultimately strengthen the cryptocurrency market.

And given that the amount of venture capital that can be funneled into cryptocurrency startups is limited, the idea of such a market cleanup makes more sense. There is no point in “pouring” money into projects that are already doomed. The organizers of the latter will not like such ideas, of course, but the cryptocurrency market is objectively not yet ready for self-regulation. Therefore, perhaps crypto winter 2022 is a kind of planned medical procedure. Painful, uncomfortable, unpleasant, breaking plans – but certainly useful.

When does crypto winter start?

Cryptocurrency market analysis is a highly imprecise science. Therefore, we can only talk about when the crypto winter of 2022 will end with very large additions. But discussing when it starts (!) is possible. As we believe, it happens when the sell-off begins from the maximum possible mark, showing the value of bitcoin as an indicator of the health of the entire cryptocurrency market.

Exactly the same situation took place in December 2017, when the bitcoin price reached its maximum (almost 19.5 thousand USD), and then fell sharply to 3300 USD (83% of the maximum bitcoin value). Now the situation is repeating itself. BTC reached its maximum (almost 68 thousand USD, on November 8, 2021), then fell down:

To 46.2 thousand USD (December 17, 2021).

To 35.02 thousand USD (January 22, 2021).

To 29.16 thousand USD (May 11, 2022).

Up to USD 17.7 thousand (June 17, 2022).

Whether the “bottom” has been reached, or whether the decline will continue further, we don’t know. Therefore, it would be irresponsible to say when crypto winter will end. There is reason to believe that there are subtle signs of recovery in the cryptocurrency market. But given the extremely unstable political situation in the world and the powerful pressure on the U.S. dollar, the crypto winter of 2022 could very well go into 2023. 

Cryptocurrencies on steroids

Analysts argue that the rapid rise in quotations in 2020 and 2021 is largely due to unprecedented injections of liquidity from the U.S. Federal Reserve. So large amounts of money actively stimulated demand for cryptocurrencies and the emergence of tokens, whose creators got involved in the general cryptocurrency hysteria, seeking to grab themselves a piece of the pie.

But injections could not give the cryptocurrency market what it needed (and still needs!) the most – stability, legal recognition and legalization at the state level. The Fed’s injections in a sense “relaxed” the market, creating a sense of a bright future “here and now”. In this case, the precipitous fall that began in early November 2021 is “payback for sins.” The party is over, and someone has to pay the bill.

That someone is investors who invested in coins in the rush of growth, often investing not in supposedly safe tokens but in one-day projects. The money that was spent can not be returned, many projects were literally swept away in a wave of bankruptcies, and the crypto winter of 2022 “cleaned out” the market that fell into anabiosis even more.

On a wave of cryptocurrency boom, many have forgotten that when liquidity goes away, speculative assets are the first to hit. And given that all (!) cryptocurrencies are like that, it’s not surprising that the start of crypto-zima in 2022 coincided with the end of pumping the market by the Fed.

It flew away, but promised to return

When will crypto winter 2022 end? How long will crypto winter last and is there light at the end of the tunnel? The answers to these questions are really not that crucial. Much more importantly, crypto winter 2022 will definitely be over – too much money is invested in cryptocurrencies, and investors are unlikely to agree to lose it all. The cryptocurrency market will recover even if the Fed does not resume the practice of liquidity “injections.”

Perhaps the recovery will not be as fast as we would like, and cryptocurrencies will not reach the level of early November 2021 right away. But that it will happen is almost certain. The crypto winter of 2022 will be over, and cryptocurrencies will once again become a desirable investment target. So that someday, at a bitcoin price of 100-150 thousand USD per coin, it will fall into a deep peak again. Or did anyone expect otherwise?

Tips and tricks

Right now, the cryptocurrency rate is such that there is no apparent reason to invest. Crypto Winter 2022 is not over yet, there are signs of stabilization, but they are very weak, the situation remains highly uncertain. Bitcoin and top ten tokens have stopped falling, but no one knows when the steady growth will start. Only stabelcoins make us happy, but this class of cryptocurrency assets is more oriented to protect investors’ assets rather than to multiply them.

As for specific recommendations to our readers, they will be expected. Be patient. If you have cryptocurrencies (bitcoin, ether, altcoins) in your hands, don’t be in a hurry to dump your assets – we believe the hardest times are behind you. If you’re just planning an investment, it’s worth the wait. A second wave of cryptocurrency decline, while unlikely, is still possible.