Has a long and hard crypto winter arrived? In this context, we do not mean a regular price-swing of limited proportions, but a prolonged downward shift similar to that of 2018-2020? As of now, you can be sure. At the same time, this risk cannot and should not be disregarded. Thus, both companies and ordinary crypto owners must take possible implications into consideration. Being prepared is the basic premise for dealing with the new threats successfully and with minimum losses. So here is what web3 industry experts say!
Crypto Winter? Now?
To begin with, how can we define a ‘crypto winter?’ Recently, CNBC has defined this elusive concept as a significant period of time when ‘prices drop without any recovery in sight for over a year.’ So, is what we are observing now this very thing?
In one respect, it looks like this.
- Coindesk mentioned on Jan 25th that a $700B share of the crypto market capitalization has been literally wiped out since the start of 2022.
- It took BTC two days only, on Jan 20-22 to fall from 40K to 35K bucks. As you might guess, such downward trends make no optimists.
On the other hand, it might not be that bad, still!
For instance, Coindesk highlights some mitigating factors able to cool the paranoia a little bit!
- The 2nd layer systems intended to make blockchains more scalable and speedy are already in place. By the way, the Evercode White Label Wallet for crypto supports the most prominent one, Lightning Network.
- Permissionless web3-based elements are already popular as well, dApps and NFTs are the first things that come to mind.
- Corporate and institutional investors have already joined the trend and are likely to stay in the industry.
- The ongoing regulation of the crypto market may also be a plus. Some governments have managed to find or are trying to find a middle ground between crackdowns.
Reasons Behind the Cold Winds
As for the driving forces behind the crypto winter, experts cite an entire range of them.
- The first one sounds like a bad joke. It may seem to be a paradox, the recent influx of institutional investors – one of the most promising developments – has turned out to be a negative factor. The fact that there is big institutional money in the industry makes crypto dependent on the traditional markets and global stock. If you check out the latest news from that sector you will see that the S&P 500 has fallen by 8%, while the Nasdaq index has fallen by 12%. There must be a correlation here.
- Another factor is the obviously hostile environment created by several governments. While the Chinese crackdown is not a surprise for anyone, many other nations are following suit. To name a few, there are Turkey, Indonesia, Vietnam, etc. Even in India where crypto is extremely popular the government is imposing restrictions.
- Painful memories and fears associated with 2018. No one forgot it. No one is likely to forget it in the near future. As a result, self-fulfilling prophecies based on that negative experience are a powerful engine for the crypto winter. Nuff said.
What should I do?
To sum up, the crypto winter is not without its own reasons and might be overexaggerated. You still may ask a question: ‘Yes, I understand that and I don’t care about the reasons and the future. What should I do now, in this bear market’?
Everyone is to make their decisions on their own. At the same time, there are some possible strategies you might find useful.
- While FOMO (fear-of-missing-out) is a popular strategy now, Coinbase reminds that, so far, holding your BTC for longer periods of time ‘has to date been a proven strategy.’ After all, Bitcoin is still one of the most successful assets of the century! In this case, make sure that your wallet is safe and ever-ready to be used, just like Evercode’s White Label Wallet (which is a perfect option to store your digital funds).
- Fortune recommends users explore the opportunities of crypto staking. Again, our White Label crypto solution makes it possible for your company to generate passive incomes as well.
- Some diversification of your portfolio, while almost all the available assets are in the red and cost cheaper, is also a conceivable alternative. Beyond doubt, you are not surprised that our White Label Wallet for digital assets makes it possible for your business to handle up to 300+ coins and tokens and benefit from 50 000+ exchange pairs!
How can we sum up this piece? Whether it is a true crypto winter or not, it is quite chilly! So contact us for a warm talk about your edition of the Evercode White Label Wallet!