Crypto winter refers to a period of sustained bearish sentiment in the cryptocurrency market, characterized by downturns in prices and trading volumes. During crypto winter, only the strongest projects and tokens survive as investors take their money out of declining markets.
The term was coined in 2018 to describe the dramatic fall in crypto prices that followed the preceding crypto bull market in 2017. Crypto winter is defined by steep declines in crypto prices and trading volumes. During this period, the prices of major cryptocurrencies like Bitcoin and Ethereum fall and market optimism dries up.
The markets become more bearish, with investors fleeing from the sector in search of better returns elsewhere. At the same time, new cryptocurrency projects become increasingly rare, as few people have the resources or willingness to take risks with startups during bearish markets.
The most visible sign of a crypto winter is a drop in the total market cap of cryptocurrencies, which continue to slide until conditions improve. Additionally, ICOs become increasingly rare as many investors remain wary of new projects, opting instead to hold existing coins or wait for prices to get close to their bottom.
Some new platform tokens are still issued during crypto winter, but most of them are issued at low volumes, failing to generate any sort of interest among investors.