Lessons From the 2018 & 2022 Crypto Winters and a Survival Guide for the Next Bear Market
Bear markets are a natural part of the financial cycle, with even the most bullish periods of growth having to end in contractions.
Yet each bear market has its own unique causes and conditions, as the cryptocurrency industry has already found out during the two major crypto winters it has experienced since Bitcoin’s launch in 2019.
The first of these winters arrived in 2018 and the second in 2022.
Both of these depressions had their own particular triggers, with the differences between them – related to market dynamics, utility and regulation – showing how far crypto has matured since its emergence more than a decade ago.
In contrast to the 2022 downturn (about which more below), 2018’s crypto winter followed more from internal factors.
The market was still in a young and immature state, having experienced its first mainstream bull rally in December 2017 and January 2018, which was characterized by excessive hype and exuberance.
Yet because cryptocurrencies and blockchains offered little in the way of real-world utility at the time, prices were destined to crash back down to Earth, with Bitcoin going from a then-record of $19,783 on December 17 to below $7,000 by early February.
“The market wasn’t ready for primetime just yet, due to the nascency limitations of blockchain technology,” explains Fuel Labs CEO and co-founder Nick Dodson. “Additionally, an initial period of intense hype surrounding certain cryptocurrencies could have led to an unsustainable bubble that eventually burst.”
Helping the bubble to burst were a couple of other significant causes, with the regulatory blowback being the most notable. This was especially the case in China, which banned initial coin offerings in September 2017 and then outlawed all crypto
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