What is Crypto Winter?


Crypto winter is a colloquial term for the current period of low prices and lack of interest in cryptocurrencies. It began with the dramatic collapse of bitcoin's price in China at the end of 2017, as reported by Bloomberg on December 28th, 2017. Crypto winter typically lasts until early to mid-2018, when many investors expect bitcoin to rebound sharply.

Tax-related selling pressure significantly contributed to bitcoin's decline from its December peak of nearly $20,000 to its current level of around $7,500. It's estimated that up to 10% of all bitcoins were sold during December of last year by owners rushing to avoid paying higher taxes when bitcoin prices were at their peak in USD terms. Venture capitalists have also hit, with many investors selling their shares in early-stage companies. In the past, bitcoin has generally declined prices following the new year. The trend remains as prices fell to over 20% for the first few months of 2018. The correction in January was inevitable due to the significant rise in December, which had not been seen for eight years.

Many experts conclude current crypto winter is simply a correction from the parabolic run-up of bitcoin's price. As the market recovers, many expect the space to continue to grow in value and popularity in 2018. The cryptocurrency market is still young, and it's unclear what will happen in the long term. However, there's no denying that bitcoin and the rest of the market are resilient. Despite these setbacks, Bitcoin is the rarest to survive the 2008 Financial Crisis and has emerged as one of the most valued cryptocurrencies.

Why is crypto winter called this name?

This name calls it because Bitcoin and AltCoins, who use Proof-of-Work mining algorithm, value at the highest point in the market, then collapsed almost by 50% of market cap and continues to fall. Crypto Winter is a term that describes the fall in the cryptocurrency markets after the rapid Bitcoin price surge in late 2017.

Since its inception, Bitcoin has seen four major "Winters" where its market value tumbled and would not recover for months at a time. It has led crypto enthusiasts to call any severe downturns in the crypto markets "crypto winters." The phrase is derived from a similar term describing long periods of economic stagnation called "winter."

What are these economic winter periods, and how do they relate to crypto?

First Winter

Bitcoin saw its first major economic winter between September and November 2017. It was when governments tried to regulate cryptocurrencies following their rise in popularity amongst investors and traders. China took a heavy stance against ICOs and forced exchanges to close several times in the first few months of 2017. It continued into 2018 as many of these exchanges slowly began reopening.

As bitcoin slowly recovered, it continued to see another significant dip within the next two months. SWIFT, an international bank transfer system, announced that it would begin monitoring cryptocurrency transactions for money laundering purposes. This announcement led to another worldwide drop in the price of bitcoin. It was due to fears that banks would begin blocking individuals from using Bitcoin as a medium of exchange.

Second Winter

From December 2017 to February 2018, the market value of bitcoin dipped further and was dragged lower by the cryptocurrency craze known as the "Fomo Bubble." FOMO is a term used in crypto circles referring to the Fear Of Missing Out – the fear of missing out on profit opportunities when prices are soaring higher. As a result, investors were willing to pay big money for virtually any coin they could find, so much so that traders were trading at prices far above their fair value.

Third Winter

From June 2018 to September 2018, Bitcoin saw its third major winter or cryptocurrency market correction. During this period, two separate events shook the crypto markets, and investors lost much of their confidence in the crypto markets. The first was a report by the International Monetary Fund that stated that cryptocurrencies were not secure and posed risks for investors. The second was Facebook's ban on all cryptocurrency-related advertisements, which prevented people from advertising ICOs and other money-making opportunities to users. It resulted in another massive dip in the price of bitcoin.

This dip, however, coincided with one of the most volatile months in Bitcoin history. It was the month of August when Bitcoin became the first cryptocurrency to break through the USD 5,000 mark and ride high from there. Then on September 18th, 2018, Bitcoin hit a pivotal record high of almost USD 20,000. The price of bitcoin has since seen massive volatility, which many believe indicates that it is due for another significant economic winter.

Fourth Winter

Bitcoin's fourth economic winter came in December 2017 when it dropped from a high of almost USD 20,000 down to below USD 13,000 for the first time in its history. This drop resulted in the South Korean government announcing that it would ban anonymous trading accounts.

It is significant because many investors in South Korea use cryptocurrency exchange markets to launder money and avoid capital gains tax. Unidentifiable virtual accounts made it easier for these investors to remain anonymous and helped them get around tax laws in their area. By banning this practice, the South Korean government made a big move by attacking the illicit use of cryptocurrencies and driving the price down significantly.


The following crypto winter could catch you off guard − even if you consider yourself a seasoned cryptocurrency investor. While crypto winter is not a new phenomenon and may be regarded as a natural part of the crypto cycle, it can still feel like you're taking an economic beating when the bottom falls out. Just stay calm and remain focused on your goals. The markets will rebound eventually, but you mustn't lose hope during the downturns. Remember: these downturns are part of the process, and everything will get better in time.