Bitcoin (BTC 1.08%) dropped below $95,000 on Nov. 14, marking its lowest point since May. The lead crypto has fallen by over 13% in the past month and is struggling to climb back above the $100,000 mark -- an important psychological barrier. Today's dip stoked fears that we could be entering another crypto winter.
According to Coinglass data, there were over $1.1 billion in outflows from Bitcoin exchange-traded funds (ETFs) in the past two days. The Crypto Fear and Greed Index, a common indicator of market sentiment, is registering extreme fear.
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Let's dive in and look at what exactly makes a crypto winter and what it might mean for crypto investors.
Why is Bitcoin falling?
Unfortunately, the uncertainty created by the government shutdown hasn't gone away, adding to risk-off sentiment. As the government starts to reopen, not only could it inject liquidity into financial markets, but key data will slowly start to flow again. Depending on what the economic data shows, both might help to change the tide for Bitcoin.
There's a bigger -- yet connected -- weight pulling on cryptocurrency prices. The Federal Reserve looks less likely to cut rates again in December. CME Group, which tracks the likelihood of rate changes, now puts the chances of a cut at almost 55%. Rate cuts can have a big impact on cryptocurrency markets because they encourage investors to take more risk.
Zooming out, while Bitcoin has posted huge gains in the past five years, there's a chance that the market has become overheated. The exuberance over the potential impact of a pro-crypto administration and the influx of institutional funds may be cooling.
Are we in a crypto winter?
The phrase "crypto winter" gets bandied about a lot, but it doesn't have a fixed definition. It isn't like the stock market, which is considered to be in a bear market when prices fall more than 20%. As a result, crypto social media starts to feel like a Game of Thrones episode with a barrage of "winter is coming" posts every time prices wobble a little.
Broadly speaking, a crypto winter is a period of prolonged negative sentiment. And given that it's only been six weeks since Bitcoin set a new all-time high, I think talk of a crypto winter is a bit premature.
On that note, it's worth viewing the current price drop in context. Bitcoin's price has dropped significantly in the months following its record highs, and those drops did not always signal the start of a crypto winter. According to CoinGecko data:
- April 2021: Bitcoin peaked at over $63,500. In July, it dropped below $30,000 (over 50%).
- November 2021: Bitcoin topped $67,000. By January 2022, it fell to almost $35,000 (almost 50%).
- December 2024: Bitcoin broke the $100,000 barrier, reaching $106,000. In April 2025, it fell to $76,000 (almost 30%).
Each time, Bitcoin has not only recovered, but gone on to break new ground. There are no guarantees, but it is important to keep short-term price fluctuations in perspective.
CRYPTO: BTC
Key Data Points
How to protect your portfolio when prices fall
Dramatic downward price shifts can be difficult to stomach, even for long-term cryptocurrency investors. Here are three ways to handle price drops.
1. Don't make panic decisions
Whether you're considering buying the dip or selling your crypto because you're worried prices may fall further, take a beat. You may buy only to find Bitcoin drops another 20% tomorrow. Or you might sell and miss out on a rapid recovery.
Consider whether your original investment thesis still holds. If you still see value in Bitcoin long-term, now is not the time to sell your crypto.
2. Ensure that crypto is part of a balanced portfolio
Diversification can help reduce risk and insulate your investments against dramatic price swings in one sector or asset. For example, if high-risk investments like cryptocurrency only make up a small percentage of your portfolio, a crypto winter won't completely derail your finances. Be clear on how much risk you are willing to take, and how much cash you want to allocate to different industries and investment types.
3. Avoid leverage
Leverage is essentially a way to borrow funds to increase exposure. And in a volatile market, it dramatically amplifies the risks. For example, an investor might use 5x leverage to multiply their position by 5, turning a $1,000 position into a $5,000 one. That's great if it amplifies returns. Less so if the market moves in the other direction, as the investor may lose everything. You need to keep a certain amount of funds in your account to trade with leverage. If your balance falls below this, the broker may liquidate your position.
Every market follows cycles of growth and decline, and cryptocurrency is no different. As a long-term investor, what matters is to understand the risk you're taking on and how to mitigate it.
