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Are you worried that the new crypto winter is coming?
Read on to learn what it is and why it is a good thing.
Crypto Winter – What is it?
I didn’t check this, but am pretty sure that the term “Crypto Winter” was coined from the popular tv show “Game of Thrones” and their famous “Winter is coming”.
In the tv show, every few years, the winter comes, bringing lots of danger and uncertainty.
The crypto winter isn’t any different.
Every few years, we have a crypto market crash.
The cause can be different, but the result is rather the same- red price tickers and lots of bankrupt traders.
So in simple terms, crypto winter refers to bearish market sentiment, which can last months and even years.
Has it happened before?
Yup, if you didn’t know, we have gone through several crypto winters already.
The first crypto crash has happened in 2011
After reaching the price of around $32 per one BTC, the Mt Gox exchange announced that hackers have stolen BTC worth millions of dollars from their customers.
The Mt Gox exchange was the biggest crypto exchange at the time, so the price of BTC has fallen to a miserable $0.01 in just one day!
In 2013, we had two crypto crashes
First, in the spring, Mt Gox got hacked again, dropping the BTC price from $260 to around $50.
Then in the winter, China banned Bitcoin, and the price dropped from $1150 to $500.
2017 was the mainstream bubble that ended badly
You’re probably more familiar with this one, but in 2017 we saw Bitcoin rising from $1000 to $20000.
Then Bitcoin started falling, losing more than 50% in a matter of days, and this derailing lasted until the December of 2018 when BTC hit the price of $3500.
2019-2020 was one of the largest crypto winters
In 2019, we saw some increase to around $11000 per Bitcoin, which yet again was wiped out in March of 2020, along with the rise of the Covid-19 crisis.
From $3600 per BTC in March of 2020, we went to $64000 per BTC in April of 2021.
In July of 2021, we saw a drop to $32000 per BTC, caused by the China ban on crypto mining.
By November of 2021, we reached a new all-time high, when BTC hit the price of almost $68000.
This was wiped out yet again by the January of 2022 when we hit around $30k again.
There was a small relief in March when prices went up to $46000, around which time the crisis in Ukraine started.
Fuel and gas prices skyrocketed, and the fear of a new recession appeared, dragging crypto and other assets markets down once again.
Right now, the price for one Bitcoin is $20590, and it’s no wonder we hear about the new crypto winter.
We are in it already.
Why Crypto Winter is Good?
Okay, now that you know what it is, you may wonder- how the hell it can be a good thing?
As you should be able to understand above, each crypto winter came after a crisis.
In the beginning, when the crypto market was small, it was enough for the largest exchange to go down or get hacked.
Then with time, as the crypto market matured, those problems became less devastating.
Still, the crypto market isn’t immune to global economic tides and goes with the flow as all other assets.
Crypto Winter is to be embraced
After the rain, the rainbow comes.
And that’s exactly why crypto winter is a good thing!
Cryptocurrencies are still a relatively new market, but stocks, commodities, and other markets are doing the same for more than a century now.
Just take a look at this slide from the recent Tomorrow Conference:
Or even better, take a look at the 100-year historical chart of Dow Jones.
If you click on the tab “By Recession”, you will see that there have been 19 recessions so far:
So why do people still invest in stocks, and why should they do the same with crypto?
Because that’s how our economy is functioning worldwide.
The mechanism is pretty simple:
- Crisis happens and things go down.
- Investors lose money and pull out, crashing the markets even further.
- The markets spend some time in reds.
- Only those brave enough or smart enough buy while prices are small.
- Prices start rising, at which point anyone wants in again, which pushes prices even higher.
- The crisis happens again.
Rinse and repeat!
So in a nutshell, those who buy when prices are low are the ones that will make the most profit when markets start to trend again.
Crypto winter is a great opportunity, as it provides you lower price entries into the market.
When to expect a new “Crypto Summer”?
No one knows.
If Bitcoin and all other cryptocurrencies go to $0 tomorrow, there’s no one to blame.
Crypto markets are the same as any other markets, led by supply and demand.
However, we can take a look at history and make certain estimations.
2013 – Bitcoin went from $50 to $1150.
2017 – Bitcoin went from $1000 to $20000.
2020-2021 – Bitcoin went from $3500 to $68000.
Did you notice a pattern?
For the last 3 times in a row, it took around 4 years for prices to fall by large, and grow by even larger.
Is this a coincidence? I don’t think so, and the reason is that Bitcoin is Halving.
Bitcoin Halving happens approximately every 4 years and represents the change in mining rewards.
It’s called halving because miners’ reward gets cut in half.
And this, by the mechanism of supply and demand, gets the investors excited, because they know that twice less Bitcoin will be released after the halving.
There are no guarantees, but so far it worked pretty well, don’t you think?
What should I invest in?
That’s a really good question.
Especially as there are no definitive answers.
In fact, no one can say this for certain, as markets have their own “soul”, and do as they want.
Still, there are certain cryptocurrency projects that I think will rise more than others.
I already wrote my pick on small-cap cryptocurrencies to pay attention to, and I still stand behind it.
Yes, the prices are much lower than when I wrote the article, but in the long run, I believe in the potential of those projects.
I definitely suggest you take a look at that article and see if you can pick your winner.
After all, many of those projects are 3-10x cheaper than they were a few months ago.
However, my taste has revised a bit, mostly due to the crypto crash we’re into right now.
In 2021, the prices were so high that I didn’t even consider investing in cryptos that aren’t small-cap.
But now that the crypto winter is here, I see a new opportunity to invest in strong and proven crypto projects as well.
Cryptocurrencies to invest in during the crypto winter
- Bitcoin– The mother and father of all cryptocurrencies currently trade at around $21000. Considering the strength and popularity of this project, it would be a shame not to invest at least a bit in it. In fact, when Bitcoin falls, most other cryptos fall much more, which makes it a perfect candidate for investment during crypto winter.
- Ethereum– The mother and father of smart contracts, not much needs to be said for Ethereum. It is a very strong platform, led by a great team, and the current price of $1100 is rather discounted from the all-time high of $4700. We need to see how “The Merge” will play out, but the general sentiment is that Ethereum is here to stay and yet to grow.
- Polkadot– is one of the greatest crypto projects we have seen over the last few years. DOT is a high-quality project that enables the communication and transfers between different blockchains, which is something we need for further crypto growth, as well as easier and more complex usage of the existing and new blockchains. The all-time high was around $54, and it currently can be bought for just $7.
- Internet Computer– I think most people have an aversion to ICP because of its price action. It’s mostly falling since the initial listing on a few exchanges in May of 2021. But it’s undeniable that they have a great project and an even greater team behind it. On the listing date, the price was insanely high($500), but it quickly dropped and traded in the $20-$100 range for the last year or so. Right now, the current price per ICP is $5.3.
- Solana– Solana is a great and very popular project, that went from $2 to $250 just in 2021. I find Solana a viable investment opportunity mostly because it is widely used, especially in the NFT industry. With time, I expect Solana to grow along with the NFT markets and believe it has a bright future ahead. The current price of $29 is very tempting if you ask me.
- Helium– HNT is something entirely different from most other cryptocurrencies. It powers and provides a framework for various smart devices, essentially creating a network for IoT(internet of things). It uses radio waves and is a rather unique project on the market. With an army of miners that are making the network stronger every day, in my eyes, the Helium price will grow over time. In 2021, it went from $1 to $50, and right now trades at around $9.5.
- Chiliz– is the only small-cap coin that I’ll be listing here, simply because I love it so much. Their project is trying to disrupt the sports fans industry, and so far they have contracts with pretty much all teams from the NFL and NBA, some of the top European football clubs, Formula 1, UEFA Champions League, and more. I already wrote about Chiliz here and here.
The more you wait, the more you can profit
If you got this far, you probably understand that crypto winter is a great opportunity to buy and wait for better times.
But what if you can earn even more while waiting?
You can, and all you need to do is stake your investments.
By staking, you lock your cryptocurrency on the exchange, and in return, you get a certain APY.
It’s that simple.
The only disadvantage is that you can’t trade your coins while they are staked, but if you believe in crypto for the long term, this isn’t an issue.
There are many crypto staking platforms out there, but I prefer Binance since I keep my crypto holdings there, and it’s really easy to use.
Here are some of the rates that you can get right now if staking through Binance:
- Polkadot -20.18%
- Internet Computer – 25.39%
- Solana – 13.47%
- Helium – 7.65%
- Chiliz – 10%
So considering the crypto winter might last for around 2 years more, you can stake and earn almost 50% on your DOT and ICP, 30% on SOL, and 15-20% on your HNT and CHZ holdings.
While doing pretty much nothing.
The process of staking is very simple, as soon as you have some crypto in your spot wallet on Binance, you can go to the earn wallet, and start staking.
But if you have any problems or questions, simply leave a comment or contact me through the contact page.
I hope that this article helped you learn about what the crypto winter is, and why it is a good thing.
I would like to hear your comments and questions, so please leave them below!