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Crypto Winter or Crypto Ice Age? Our Expert Weighs In

Investors have lost millions of dollars in the current crypto downturn. Here are some reasons why it’s happening and what you should do about it.

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Tom Blackstone
Gabe TurnerChief Editor
Last Updated Oct 20, 2022
By Tom Blackstone & Gabe Turner on Oct 20, 2022
The content on this page is provided for informational purposes only. does not offer financial or investment advice, nor does it advise or encourage anyone to buy, sell, or trade cryptocurrency. It is advised that you conduct your own investigation as to the accuracy of any information contained herein as such information is provided “as is” for informational purposes only. Further, shall not be liable for any informational error or for any action taken in reliance on information contained herein.

Bitcoin reached a peak price of over $67,000 in November 2020. But by the end of June 2022, it had fallen by over 66 percent, to a little over $20,000 per coin. Ethereum has fared even worse, falling by over 75 percent since its peak in November.

It wasn’t that trading crypto wasn’t safe. As long as investors kept on top of their digital security, fraudsters like ID thieves and hackers didn’t really have many avenues of attack. (Digital threats and bad actors are so common these days, I don’t know of any coiners who venture out without basic ID theft protection).

Still, the market was shaky. Over $2 trillion of crypto market value has been wiped out over the past six months.

It’s not just investors who have suffered. Major crypto exchanges like Coinbase and Gemini have laid off 10 to 18 percent of their workforce as their trading revenue has fallen.

So you’re probably saying to yourself, “What in the world is going on with crypto?”

Well, in response to the downturn, Gemini founders Tyler and Cameron Winklevoss (yes, “The Social Network” guys) have stated that the industry is facing a “crypto winter,” or a protracted fall in crypto markets for which there is no obvious point at which it will end.

But here’s the good news: Crypto winters are nothing new. They’ve happened every four years in the crypto market, almost like clockwork.

Pro Tip: If you decide to invest in crypto right now, you’ll want to make sure you know how to protect your crypto against hackers and scammers.

What Is a Crypto Winter?

A “crypto winter” is a significant downturn in the crypto market that lasts for a long time. It’s hard to figure out exactly who used the term first. But it seems to have first become a popular phrase in the downturn of late 2018 and early 2019.

During this time, Bitcoin fell from over $20,000 to slightly over $3,000, and Ethereum fell from around $1,400 to approximately $100. These are declines of 85 percent and 92 percent, respectively.

The current downturn is being compared to this one, which is why the term “crypto winter” is resurfacing again.

A Brief History of Crypto Winters

Crypto winters seem to have plagued the market ever since crypto was invented. Here is a brief history of previous crypto winters.

Late 2013 to early 2015

Over the course of 2013, Bitcoin rose from under $14 per coin to a December peak of over $1,100. But beginning in mid-December, it began falling. And throughout the following year, it kept falling … and falling … and falling.

By January 14, 2015, each Bitcoin was worth only $177.28, a mere 16 percent of what it had been worth before it started falling. This was the final day of the first crypto winter ever recorded.

At the time, analysts blamed the downturn on a combination of the Silk Road being shut down by authorities and Mt. Gox going bankrupt.

FYI: Some investors are now buying crypto for the first time, hoping to get in at low prices. But every investor is different, and finding the best exchange to suit a person’s individual needs isn’t always easy. We’ve published this list of the best crypto exchanges to help narrow down the options. It lists exchanges for buy-and-hold investors, hardcore traders, and everything in- between.

Late 2017 to late 2018

In 2017, Bitcoin rose from $960 to $19,086, a 20x gain. Ethereum rose from $10 per coin to $1,000 per coin, a 100x gain. But after the peak in December, the entire crypto market went into a protracted downturn, losing 85 to 95 percent of its value over the next year.

Bitcoin finally bottomed on December 14, 2018, about a year after the crypto winter had begun.

Most analysts at the time blamed the downturn on overhyped initial coin offerings (ICOs).

The Current Crypto Winter (2022-?)

In January 2020, Bitcoin was worth just over $7,000. By November 8, 2021, it had risen to over $67,000, a gain of over 800 percent. Ethereum also gained over 4x during this time period.

But then the crypto market immediately started falling and kept falling for the next seven months. Both coins have currently lost over 60 percent of their value since the November peak, and the rest of the crypto market has done just as badly as Bitcoin and Ethereum.

The current crash is often blamed on overhyped non-fungible tokens (NFTs) and NFT marketplaces. But in reality, it could be a combination of different factors. There’s really no way to know for certain. That said, let’s dig a little deeper and investigate what could be at play in the falling of crypto markets.

Pro Tip: Some NFTs really are overhyped, outright scams. So it’s important to be able to distinguish between legitimate and illegitimate ones. I explain some red flags to look out for in my guide to NFTs and guide to finding safe coins.

What Causes a Crypto Winter?

Crypto winters are spooky and weird. They seem to mysteriously repeat every four years. No one knows for certain exactly why. But here are some best guesses as to why they might be happening.

The 4-Year Bitcoin-Halving cycle

When Bitcoin was first invented, it was programmed to reduce its mining output by 50 percent every 210,000 blocks, which is approximately every four years. This repeating event is called the “Bitcoin halving.” This may have something to do with the four-year boom and bust cycle we see in the crypto market.

When it launched on January 3, 2009, the Bitcoin network produced 50 bitcoins every 10 minutes on average. Here is a list of dates when this output was cut in half.

  • November 28, 2012: Mining output was reduced to 25 bitcoins every 10 minutes
  • July 9, 2016: It was reduced again to 12.5 bitcoins per block
  • May 11, 2020: Mining output fell to 6.25 bitcoins per 10-minute block

In each of these cases, the halving event happened approximately four years from the previous one. The second halving event happened six months early, and the first one occurred three months early. In each of these cases, the bull market in crypto began within three to six months of the halving event, and the crypto winter started around a year to a year-and-a-half after the halving event.

Why the halving cycle causes booms and busts

One reason why this may have happened is because of the behavior of Bitcoin miners. When mining output falls, the cost of producing each bitcoin rises. This is because bitcoins are produced in blocks, and the cost of producing a block doesn’t go down when mining output falls.

Example: Let’s say that it costs $10,000 to produce a block of 10 bitcoins, this means that it costs $1,000 per bitcoin. But if a halving event reduces the block reward to five, then it suddenly costs $2,000 to mine each bitcoin (because $10,000 / 5 = $2,000).

This sudden increase in the cost of production may cause miners to hoard bitcoins instead of selling them for less than they cost to produce. According to this theory, this causes the price to rise, which causes speculators to get excited about Bitcoin, which leads to an extended bull market in Bitcoin.1

But this bull market can’t last forever. Eventually, the price rises so high that mining profits become unusually large. This attracts competition between miners and leads to an increase in the difficulty of the Bitcoin hash problem. As the difficulty rises, miners are forced to sell their bitcoins in order to buy better hardware. It is this selling from miners that causes the crypto winter.

Of course, this is just a theory. No one really knows if it’s true. But since the crypto boom always happens within six months of a halving event, and the winter happens a year to a year-and-a-half after each halving event, this may explain the spooky recurrence of it every four years.

Federal Reserve “tightening” policies

Another explanation for the crypto winter involves Federal Reserve policies.

Financial analysts have long recognized that global recessions happen every 7 to 10 years. When the world is in recession, the Federal Reserve and other central banks lower interest rates in order to stimulate employment. This entices investors to borrow money and buy assets like stocks, bonds, and cryptocurrency.

As the prices of these assets go up, people feel better about the economy, and they spend more money. Eventually, this spending drives up employment, which is the whole point of central banks lowering interest rates.

But when employment gets to a certain point, the extra spending can no longer drive it up further. The economy hits full capacity, and the extra spending starts to cause inflation (well, a myriad of factors cause inflation, but this is one of them).

At this point, the Fed and other central banks raise interest rates. Faced with higher rates, borrowers tend to sell their stocks, bonds, and cryptocurrency to pay off their debts.

This could also be part of what causes a crypto winter.

FYI: Many scammers and hackers try to take advantage of new crypto investors. But you can defend yourself by choosing a legitimate exchange, enabling 2FA, withdrawing your crypto to a wallet, storing your seed words in a safe place, and practicing other strong security habits. You can learn more in my complete guide to investing in crypto safely.

This year, the Federal Reserve is tightening or raising interest rates at the same time that we are reaching the 1.5 year mark since the Bitcoin-halving event occurred. So this may explain why this crypto winter has been especially “cold.”

When Will the Crypto Winter End?

If history repeats, the crypto winter should end sometime between December 1, 2022, and January 31, 2023. But don’t hold your breath. Financial markets are notorious for showing repeated patterns and then suddenly breaking out of these patterns once everyone sees them.

Since cryptocurrency has been known to break out of slumps before too long, many investors are still bullish on crypto’s future. The bigger question is … is this it for crypto? Or are there many more years of positive gains in the exciting world of crypto?

Is This the End of Cryptocurrency?

Many people wonder if this crypto winter is the “End of Cryptocurrency.” Does crypto lack intrinsic value? Is it just a ponzi scheme or bubble that is now bursting? Will crypto prices never go back to what they were in November 2021?

Among cryptocurrency researchers, the dominant view is that cryptos have value because they cost electricity to produce. But the amount of electricity they cost to produce depends on the computing power of the network. This means that a coin could become worthless if the network’s computing power declines because miners stop mining it.

So far, that doesn’t seem to be happening with major crypto networks.

Note: Cryptocurrencies sometimes rise in value by 100x or more. Other times, they collapse and go to zero. But the factors that make them rise or fall vary based on the types of coins they are. For example, in order to rise in value, Proof of Stake coins usually need lots of popular apps that people enjoy using. You can read more about this in my analysis of what makes a crypto coin go up in value.

In the case of Bitcoin, its hash power is still rising at the moment, and the difficulty of its hash problem is still increasing. This means that its cost of production (in Kwh) is also increasing. This implies that the network is still healthy and growing.

Bitcoin Total Hash Rate Chart
Source –
Bitcoin Network Difficulty Chart
Source –

Other networks show similar signs of health. Here is a chart of the difficulty for Ethereum.

Ethereum Difficulty Chart
Source –

Of course, this could change in the future. If miners become pessimistic about Bitcoin and Ethereum, they could shut down and stop mining. And this could lead to a permanent collapse of the crypto market.

Bitcoin could go back to costing pennies per coin to produce, with only a hundred or so people in the world being willing to mine it, just like it was in the early days of the crypto market. But so far, this doesn’t seem to be happening.

The switch to Proof of Stake

Another thing to keep in mind is that many crypto networks are eliminating mining and switching to Proof of Stake systems. In a Proof of Stake system, crypto is a yield-producing asset, just like traditional stocks and bonds. So it has intrinsic value.

FYI: Proof of Stake networks have no hash problems. So you don’t need a powerful mining computer to earn crypto on these networks. You can become a validator with just a regular PC. You do need enough crypto to get started though. I’ve got a complete breakdown of how it all works in the Beginner’s Guide to Crypto Staking.

In this kind of system, the health of a crypto network can be judged by the number of users that it has and the number of transactions that it does. So as long as there are still people who want to use crypto networks, the crypto market itself should survive — even if Bitcoin and Ethereum eventually collapse.

Then again, maybe the actual networks themselves will become unpopular. Maybe some new technology will come along that is even better than crypto. Who knows?

You’ll have to decide for yourself whether you think this crypto winter is going to come to an end or whether it will last forever. But these are some things to think about in the meantime.

Wrapping Up

The current crypto winter has caused investors to lose millions of dollars, and some people have even lost their jobs because of it. Bitcoin has lost 66 percent of its value, and Ethereum has lost 75 percent.

When market events like this happen, they can seem inexplicable. But crypto winters have actually happened every four years since the crypto market began, and we can come up with some pretty reasonable explanations as to why they happen.

Still, financial markets are notorious for working in patterns and then suddenly breaking out of these patterns. So nothing is certain in the crypto market or any other market.

Either way, you should now have a better understanding of what a crypto winter is, how predictable they are becoming, and why they happen.

And with that, be sure to stay safe out there in the wide world of crypto!

  1. Investopedia. (2021, November 29). Bitcoin Halving.

  2. Hayes, Adam. Bitcoin price and its marginal cost of production: support for
    a fundamental value