Introduction to the Problem
Florian Grummes, Managing Director at Midas Touch Consulting, warns about the Crypto Winter’s tremendous effect on Bitcoin prices. He said that it could break below its $18,000 support level, which will further can slump the price to as much low as $6,000.
Over a period of time, the price of Bitcoin reached the November 2021 high of approx $70,000 to now being below $20,000. The world’s largest cryptocurrency by market value, has fallen around 23 percent from the beginning of this year. Ethereum, the second largest crypto, got affected even worse, about 35 percent decline ratio from the starting of this year.
Grummes said- “ At some point I expect that this $18K support level will break, and then we could actually lose quickly another 30, 40, or 50 percent. It would be the worst case that we go down to $6K.”
Crypto Winter is a common expression that refers to a poorly performing crypto market. The term can be mirrored as that of the bearishness in the stock market. A crypto winter depicts the negative sentiments and lower average value of assets among a huge field of cryptocurrencies.
The time at which TerraUSD and Luna collapsed and it gave a motion of Domino effect in the crypto world, crypto winter already got geared up. Crypto is a relatively new asset class, and it’s possible that the prices will never recover from this bearish spell.
Perspective on Crypto Winter
Recent week denoted a big warning for stock market investors. Through Monday’s close, the year-to date declines in Coinbase, Block, and Microstrategy were 60%, 47%, and 30% respectively.
The bearish market caused Celsius to freeze assets and eventually file for bankruptcy. The list includes blockchain company Terraform Labs and hedge fund Three Arrow Capital. Terraform Labs experienced a collapse in its stablecoin TerraUSD (UST) and its sister token LUNA, which wiped out approx $45 billion in market capitalization within a week.
Grummes stated- “There has been so much scam, and so many bad projects in this sector, and we have to get rid of them,” he added “It’s very painful, I understand, especially for those who are holding, but it needs time to weed out these bad actors .” He clarifies the need to filter the crypto market of unfit or fraudulent companies.
Can the Market Shine again?
Majority of crypto assets are affected by the crypto winter. But this does not mean that each and every crypto will go down. If few think that certain digital assets will remain unaffected by the cold wind of the current market, then they can surely invest.
Grummes explained- “Usually crypto winters last 20 to 27 months, sp expect another half-a-year at least, or maybe a year, and then the Bitcoin in 2024 will bring some light, and maybe the start of a new bull market.”
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.