Crypto winter can be one of the most unnerving times in a cryptocurrency investor's life. Fortunately, they're not all winters of our discontent, and so far, all crypto winters have come to an end eventually. Read on to learn more about this phenomenon.
Causes of a crypto winter
We're still trying to really get a good feel for crypto winters and how they work, but it's generally understood that several destabilizing factors can cause crypto markets to tip into winter territory.
Crypto investors are dealing in an all-or-nothing type of investment. If things are bad, they can go really bad really quickly since there are no business assets to sell that can offset investor losses. When investors lose their confidence, they pull their money from crypto markets, causing them to stagnate or deflate considerably.
Things that might cause a lack of confidence in high-stakes investments like crypto would include global political destabilization, like the war in Ukraine, and major global economic downturns, such as the Great Recession.
Remember that crypto -- unlike stock markets -- is a global market that is constantly trading across the planet. This means that local blips may not cause problems, but widespread global issues can freeze the market.
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