What Does Crypto Winter Mean To Businesses?

Now that the bubble has well and truly burst, it is time to banish the voodoo mentality. Obviously there are exceptions, especially during 2017, where many cryptocurrencies grew much faster than the BTC. Crypto winter has definitely returned for many of the altcoins and the snow appears to be deepening. With a top of $145 during the FOMO frenzy, LTC has now dumped 62% to its current price of $55. At the moment, it is trading at around $165 which is a five month low.

It has dumped over 50% since its 2019 high and is back down 88% from ATH. The Istanbul hard fork is about to get underway but only on testnet and no major upgrades will be launched on mainnet until next year so ETH is likely to remain bearish. The same cannot be said for altcoins which have all but eroded any gains this year and are returning back to their frozen winter states. During the winter, BTC dominance hovered around 55% meaning that the pain was equally shared.

The crash caused widespread investor panic and proclamations from the mainstream media that the cryptocurrency “bubble” has ended. Meanwhile, long-time members of the crypto community were not bothered. You can easily have one name for all your cryptocurrency wallets, set up a decentralised website, and more – all with the security and decentralisation of the Ethereum blockchain. Prominent cryptocurrency analysts also believe Bitcoin’s current momentum could be a sign of bigger things to come. Mohit Sorout, a partner at Bitazu Capital, noted that with BTC’s latest spike higher, it has broken above two key downtrend resistances that have constrained price action for the past seven months. However, data from Skew Research has shown that the pessimism surrounding the current state of the world’s largest cryptocurrency might be unjustified. Focusing mostly on weekly or monthly charts, many fail to see the big picture of the market, especially when it comes to Bitcoin.

But the risk is that the 2018 downturn has produced more lasting damage to public confidence than that of 2014. This time it was the Regular Joes who lost their shirts, not the basement-dwelling bitcoin mining hobbyists. Remember, this was a time when an iced tea producer’s executives briefly showed that they could produce a miraculous share price increase simply by adding the word “blockchain” to the corporate name. Last year, as an insane market bubble, not only in bitcoin but also in countless other crypto assets, fostered a collective mania around the world, the “to the moon” language and “when Lambo? He is one of those enthusiasts who happily hands out the cryptocurrency to others in the interest of spreading adoption. On the other hand, we must also consider the huge number of projects that in one way or another, failed in the wake of the crypto winter. This happened in two ways; the first deals with the projects that created ICOs to obtain financing for a certain project, and that due to the crypto winter, these ended up being canceled or abandoned in their entirety.

crypto winter

It has not been that low since before the epic pump in December 2017 so it would be fair to say that, for Ripple at least, crypto winter has returned. This week’s big bitcoin dump has been largely anticipated by traders and analysts. The ominous looking technical triangle played out how they expected and BTC plunged 20%. The altcoin situation however is worsening as crypto winter threatens to return for many of them, this will not make pleasant reading. Bitcoin’s price trajectory for the next couple of months will most likely be determined at this important resistance zone. If Bitcoin prices can breakout above $11,300, bulls will be back in charge and should quickly push prices towards $14,500.

Crypto Winter: The Longest Bear Market Recorded In The History Of Bitcoin

The lower Bollinger Band ($3,236) also offers a lot of space and will need much more time to reach current price levels above $11,000. A very encouraging signal, however, is the new buy signal that comes from the slow stochastic oscillator. After reaching its oversold zone this indicator now has turned and would have a lot room to move higher. The large short position held by hedge funds and at the same time the strong bullish position of small speculators rather point towards further falling prices. It is also noticeable that the correction in December began pretty much on the day when Bitcoin Futures started to trade. Based on the current CoT report for Bitcoin Futures, it is obvious that traditional funds (asset managers / institutional investors) are not heavily invested in Bitcoin. This is because there are not many securitized products available on Bitcoin, which would have to be hedged via the derivatives market.

If one of your old devices gets in the wrong hands, it can be catastrophic. “Initially, the big funding for blockchain startups was initial coin offerings, but there’s a little bit of a gray area around regulation,” Menting said. “VC funding is viewed as a little bit more legitimate, if you will,” she noted, adding that large VC funds usually conduct considerable research into their investments. “An increase in VC funding translates broadly into increasing legitimacy in blockchain investments,” she said.

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With us, you’ll stay safe, secure, and full of knowledge that you can apply to yourself and others. Menting also mentioned a trend shift from initial coin offerings to venture capital funding.

crypto winter

“Another factor that could lead to volatility in the crypto market in 2021 is increased regulatory pressure on stablecoins, which will make it difficult for traders to close positions”, Kiriyenko explained. “By all fundamental indicators, we are in a bullish cycle, and the new phase of growth is unlikely to end at $20 thousands. Bitcoin is supported by institutional and retail investors, miners, halving, as well as problems in the global economy amid the coronavirus and incentives from central banks that lead to depreciation of currencies. Demand from buyers is high, and as long as investors believe in the growth prospects of bitcoin and its protective properties, it will grow, despite corrections and stops”, Kiriyenko said. EXANTE Managing Partner Alexey Kiriyenko also noted that there was no collapse in the price of bitcoin after rising to $20 thousand, as it was in 2017. Therefore, the expert warned about the risk of high volatility and a decrease in the value of the coin, however, the latter may lead to an increase in demand. Additional demand for BTC should also be provided by developing countries and economies that have come under the sanctions.

Coinbase also warns of its outsized reliance on trading fees from Bitcoin and Ethereum. The filing has a lengthy Risk Factors section, including the volatility of crypto assets—but also some surprises, like negative social media chatter around crypto. In summary, the momentum has changed and the headwind isn’t that strong, it is only a matter of time and more adoption before we see an actual bull run. Bitcoin’s weekly chart shows price bouncing from the 200-weekly moving average. Heslin Kim, VP of business development at Polymath said “liquidity in this market is sparse and has dried up in many exchanges. I think we can all agree this is a good thing, if temporary.” Another major bull signal comes from the weekly chart as I discussed before, the 200-week moving average has saved the day for the bulls. The 50-week moving average is moving fast towards the price to close the distance between them.

If you are a long-term investor, you will not really worry about these short-term levels. In my keynote speech at Coinadvice conference, I talked about risk premium, it is of critical importance here and I find this immensely interesting. For simplicity’s sake, consider this as a premium that one is willing to pay over the previous low which would have been a better entry price. For instance, the price of Bitcoin at the time of writing this article is trading at $3962 and the recent meaningful low was formed on March 4 when the price touched the price level of $3671. It is all about making an intelligent choice and buying when the price is still close enough to its bottom. For investors who are buying at these levels, they usually have a target of previous high, and for Bitcoin, it needs to be the level of 20K. While we’re just two weeks into 2020, the new year already looks very promising for the crypto industry.

Now, if the price kisses the 50-week moving average goodbye and moves above it at that stage, all bets would be in favour of the bulls. Looking at the chart, when the price breaks above the 50-week moving average, it sends the strongest bull signal and so far it has worked really well.

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“There’s a number of ways blockchain revenues are derived,” Menting explained. She noted digital asset transaction fees, consulting activities and blockchain frameworks, such as Amazon’s AWS, as methods of revenue. Bakkt‘s surging trading volume could also be “blamed” for Bitcoin’s January 2020 surge. Binance‘s Changpeng Zhao and Galaxy Digital’s Mike Novogratz have also said in the past that institutional investments will be what ultimately pushes Bitcoin’s price upwards. Ayyar told Bloomberg that while Bitcoin’s price was slated to move up “in general,” it was the launch of CME’s Bitcoin options that fueled the growth.

ABI expects “the totality of blockchain revenues to reach almost $10 billion in the next couple of years,” Menting said. ABI Research took a dive into blockchain technology and reported its findings, expecting big things from the technology in the years ahead. “We forecasted blockchain revenues for the next six years,” ABI Research blockchain and digital security research director Michela Menting explained to me in an interview. According to data from Skew Research, Bitcoin is currently off to the best start to a year since 2012. The world’s largest cryptocurrency entered Q with an 18 percent growth, which when compared to 2019’s 10 percent, shows it’s up for an eventful year. We’ve managed to do great harm to the public’s acceptance of and trust in the technology.

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Waiting for an instant crypto-winter is an overly negative scenario. Nikita Zuborev, senior analyst at Bestchange.ru, agreed that there are no prerequisites for repeating the 2017 scenario. BTC has regained a significant share of the market – despite the new “DeFi-fever”, new investors, including institutional ones, entered the sphere. The expert noted that the rhetoric around digital assets has also improved.

The data shows that the ICO market correlates directly with the Bitcoin price and that the crypto winter successfully washed the scammers out from the scene. As a result, the industry has become more complex, robust and structured than it was two years — or even one year ago. It is important to mention that this process affected all the cryptocurrencies, since they had grown thanks to the success of Bitcoin. That is, investors to see the success of Bitcoin, looked for other cryptocurrencies with similar characteristics, to try to have the same luck as those who bought Bitcoins, when this cryptocurrency appeared for the first time . It is known as crypto winter, to that cooling that the cryptocurrency markets had, since 2018, until a few weeks ago. Basically, after Bitcoin reached 20,000 USD at the end of 2017, this cryptocurrency began to have an exaggerated decline, which lasted until mid-2018, when the market began to calm down . Ripple’s XRP has had an even worse time getting annihilated to a 20 month low of $0.235.

Therefore, businesses can create this experiential incentive of cost savings and new business opportunities for participants to use the platform. Leverage on blockchain technology’s advantages, not on the coins’ values.

The FOMO got the better of the US, Japanese and Chinese investors who pushed the price till 20$ before Bitcoin went under a flash crash after the infamous Mt. Gox theft. But one that many experts think was necessary and are ultimately relieved happened. While the crypto winter’s positive and negative impact could be debated among experts, meanwhile, there is a consensus that it’s already over. A review of past media coverage can help us understand the negative impact of the crypto winter for the industry. The discourse surrounding crypto in 2018 was polluted with a number of scams, Ponzi schemes and all manner of illegal actions that resulted in millions of dollars stolen or missing in dead funding. For the crypto industry, 2018 was a year of changes due to price corrections — also referred to as the Bitcoin crash and the Great Crypto Crash.

  • While the crypto winter’s positive and negative impact could be debated among experts, meanwhile, there is a consensus that it’s already over.
  • He is one of those enthusiasts who happily hands out the cryptocurrency to others in the interest of spreading adoption.
  • In consequence, crypto winter will not affect the potential growth of blockchain businesses.
  • Coins have been brought to the attention of the general public because of their speculative investment value.
  • Demand from buyers is high, and as long as investors believe in the growth prospects of bitcoin and its protective properties, it will grow, despite corrections and stops”, Kiriyenko said.
  • Over the past three months, the price of bitcoin has risen by more than 80%.

Basically, the price for one Bitcoin has returned back to where it was trading at the end of November. So far, the sharp correction ended just below the typical 61.8% – Fibonacci retracement.

Smart blockchain projects are already headed in the right direction. Statistics from State of Dapps have confirmed this trend as it recorded the monthly dApp development to be up 182% since December 2017. Big enterprises that have used blockchain will make way for an exponential growth of blockchain use cases in various industries. As you can see, blockchain platforms that don’t use cryptocurrencies offer a different path forward that can appeal to certain parties. This means if you aren’t well-versed in blockchain technology and the crypto space, it is well worth digging further before getting involved in any blockchain project. As mentioned, cryptocurrency is merely an application running on top of a blockchain.

The blow to confidence is so great that I now regret writing last year that the surge of mainstream interest in crypto was constructive. I’d argued that although many people would lose a lot of money, the surge of buying had sparked a curiosity among a much wider group of people, such that a host of new ventures would be launched by these newcomers. These were the people, I argued, who would build the decentralized economy of the future. The underlying message was not that bitcoin is the first digital asset, a representation of value that can live on the Internet without risk of replication or counterfeiting.

Anyone who understands mass psychology can determine highs and the turning points of long-term trends with amazing accuracy. Ultimately, market prices are created by constantly fluctuating perceptions of market participants. Subsequently, there can never be an objective or fair price of an asset.

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