The crypto market is notoriously volatile, and the events of the past few days have proven this true. It has now become a regular occurrence for Bitcoin prices to plummet as much as 50% in just a few weeks or days. However, this does not seem to bother most diehard supporters of the crypto industry. In many cases, they use a decline in the market to buy more crypto.Â
Despite the hodl attitude of avid supporters of the crypto sector, some remember the crypto winter of early 2018 and mid-2020. During this period, prices went down and stayed that way, causing a slowdown to most innovations in the crypto sector.
The Current Crypto Winter
Since the collapse of LUNA, the crypto market has been in a downward spiral. Some coins have lost up to 90% of their valuation. Bitcoin has fared a bit better, having lost nearly 56% of its value since the market meltdown began. As a result, some have wondered if this time, the crypto winter will last longer due to how big the crypto market has grown. However, some believe that this crypto winter will be shorter than previous ones.
One of those people is Dan Held, the director of growth marketing at Kraken, the crypto exchange. During a recent interview at the sidelines of The Capital conference, organized by CoinMarketCap, Held revealed that he invested in Bitcoin in 2012. At the time, there was just Bitcoin and a few other coins.
According to Held, the crypto market has changed a lot in recent years. He noted that until 2019, retail investors dominated crypto markets. He noted that it was around 2020 when institutional investors began to raid the crypto market. Held also noted that major institutions like JP Morgan were discussing Bitcoin in a positive light, while in 2013 they thought crypto investors were lunatics.
Held noted that many people were leaving crypto, in line with the general bearish market in the financial markets. He noted that crypto was currently classified as high risk, which is where many people were selling their crypto assets as they try to cut risks.
Held pointed out that besides crypto markets, major tech stocks had plummeted in recent weeks. He pointed to the example of Netflix, whose stock price recently fell by almost 65% year to date. Held also pointed to Zoom, whose stock price had fallen by 43% year to date.
Why This Time It Is Different
Held pointed to absolute figures as to why this time it was different. He noted that at the start of the 2018 crypto market crash, the crypto markets lost $700 billion in market capitalization and by the end of the cycle, the crypto market was worth around $100 billion. This time, the crypto market has lost $500 billion thus far.
What is different this time is that a lot of innovation has been happening during the last crypto Bull Run. During that time, thousands of players in the tech market have been quietly working on crypto-based innovations that will soon be ready to launch. As such, while the crypto market has mainly been driven by speculation in the past, its rebound will mostly be driven by innovation, according to Dan Held. With so many players standing on the sidelines, ready to launch their crypto-related products, Held believes this time, the crypto winter will be short.
