“Crypto Winter” refers to a period in which the crypto market has really been struggling.

People debate when the crypto winter started, but most would put it somewhere around 2018 or 2019. This time marked the start of a prolonged run of weakness in the crypto market that has only recently begun to turn around.

The phrase “Crypto Winter” is very likely a reference to the Game of Thrones TV adaptation that was approaching its final seasons at the time. “Winter is coming” became a tagline for crypto watchers who could see where the market was headed.

How Bad Was the Crypto Winter

Very bad. Forbes, for example, puts its estimation at an overall market loss of $2 trillion, and many cryptos lost 50% or more of their value.

In addition, we also saw thousands of layoffs across the industry, and the collapse of hundreds of crypto services, neo-banks and exchanges.

What Caused the Crypto Winter?

The causes of the Crypto Winter are multifactorial. But in broad strokes, a combination of a global recession, inflation, the war in Ukraine, COVID, and a series of crypto exchange collapses pushed the market into a steep state of decline.

The crypto market is already notoriously volatile and can go through massive peaks and valleys in value in very short spaces of time. This volatility also makes it highly responsive to the conditions of the global economy.

When the crypto winter began, the combination of the COVID pandemic, the disruption of global markets, and the rise in inflation forced many to sell off assets. This meant that many liquidated crypto at massive levels, thus pushing the price down dramatically.

With lower crypto prices, came less traffic on crypto exchanges, and companies began to lay off staff, which eroded confidence in the market. Then, Three Arrows, Terra Luna, and FTX all collapsed in some spectacular ways. Further weakening confidence in the sector.