A term coined in 2018, “crypto winter” describes a roughly one-year period which erased all 2017’s bull run price gains, spreading despair among investors. Other characteristics included decreasing trade volume, diminishing interest in crypto, and overall low industry activity.

Are we entering another crypto winter now? To understand it, we need to look at several aspects of a crypto market, such as its cycle, hiring activity and investments.

 

The 4-year crypto cycle

One of the arguments in favor of a 2022 crypto winter is the cyclic nature of the crypto market.

Bitcoin is still the most important cryptoasset with a 45% market dominance, and it still defines price trends for the larger crypto market. This means that Bitcoin’s 4-year halving routine is affecting the whole space, translating into a 4-year crypto cycle.

Halvening is an event built into Bitcoin protocol that is reducing miners’ rewards by half every four years, effectively making Bitcoin scarcer, increasing the demand and pulling up the price. Naturally, the buying pressure always ends up by decreasing, sending prices down, while leveraged and derivatives trading exacerbate this movement.

However, as the industry develops and investors grow wiser and less susceptible to panic selling, the importance of the halvening is set to decrease.

 

Crypto companies’ recruitment

Last week, a US-based crypto exchange Gemini announced it will be dismissing 10% of its personnel, while Coinbase extended its hiring freeze on backfill roles (not refilling the jobs of people who leave the company) and even on the jobs accepted, but not yet started by the candidates. Similar measures were announced by several other exchanges across the world, notably Bitso (Mexico), 2TM (Brazil), Buenbit (Argentina) and Rain Financial (Bahrein).

However, crypto exchanges are companies like any other, and their well-being depends not only on the market, but also on their management. Thus, Coinbase’s announcement came shortly after the company published a $430 million loss in Q1 2022. Also, both 2TM and Rain Financial are backed by Coinbase.

Other exchanges do better. Bahamas-based FTX (which last month took over Coinbase’s second place by trading volume) has recently opened a branch in Japan, while Binance, the world’s leading exchange with 64% market share, is continuing to invest into legal compliance all over the globe and sponsoring the world tour of singer The Weekend.

As to the crypto recruitment, the laid off specialists might find another home with companies like Fidelity, which recently announced it would be hiring 100 more people for its crypto-focused subsidiary.

 

Crypto investments

One of the key differences between today’s state of crypto industry and the 2018’s is the amount of investment it had previously received: in 2017 a mere $1.1 billion of venture capital poured into the space, while the 2021 has set a record of over $30 billion. This investing frenzy, followed by the market downturn and the implosion of Terra, has pushed some smaller VCs to hold on and tidy up their balance sheets, but bigger (or smarter) ones show no intention of backing down. So far in 2022, global VC investment in crypto firms totaled $15 billion, as reported by Bloomberg.

This number will soon grow even bigger, as the newest $4.5 billion crypto fund by Andressen Horowitz, also known as a16z, will start investing. This fund, announced last week, will be the fourth for A16z, bringing the firm’s overall crypto exposure to $7.6 billion.

Other notable crypto fundraisers happened recently include $113 million for Pintu, an Indonesian crypto exchange, and $100 million grant fund set by Solana for the South Korean Web3 startups, both announced just yesterday.

 

All these hirings and investments translate into new crypto products and services that help bring cryptocurrencies to mass adoption and advance the Web3 development. In 2018 only about 100 DApps (decentralized applications) existed. Now there are literally thousands developed only on Ethereum (with Solana, BNB and others trying to catch up).

Other notable differences include an increasing penetration of the traditional finance space, a clearer legal framework, and of course the ever-increasing crypto grassroot adoption (only in the US crypto users already make up to 14-16% of population, according to several different surveys).

Crypto markets may not be out of the woods just yet, but with the fundamentals so much different from the last cycle, it could be too hasty to cry “crypto winter”.

Written by D.Center