Are we approaching crypto winter?

2025 opened on shaky ground for the crypto market. The first quarter of the year has swung between optimism and caution, as the market’s turbulence kept investors on their toes. The market’s characteristic volatility resurfaced once again, and average trading volumes dropped by 27.3%, from $200.7 billion in Q4 2024 to $146.0 billion in Q1 2025. While this slowdown may simply indicate market corrections and external pressure on markets, such as geopolitical tensions, there are also signs that a prolonged bear market might be on the horizon. A recent report by Coinbase has pointed to “several converging signals” that may indicate the start of a new crypto winter. Are we entering a prolonged downturn, or do we merely need to weather the storm?

In this article, we explore what crypto winter means, whether we are approaching a crypto winter, and whether there is a positive side to such a prolonged downturn. 

What is crypto winter?

The term “crypto winter” refers to an extended period of time in which crypto prices decline or fail to bounce back, and overall trading volumes are lower than usual. Unlike a bear market, which is a similar concept, a crypto winter tends to last months, and even years. During this time, major digital assets such as Bitcoin and Ethereum tend to experience dramatic price drops and market sentiment becomes cautious, or even pessimistic. These downturns can be triggered by different factors, such as regulatory changes that limit development or innovation in the crypto industry, macroeconomic shifts, or global geopolitical tensions. 

The most recent crypto winter followed Bitcoin’s surge to nearly $20,000 in December 2017, between 2018 and late 2020, the crypto market underwent a sharp correction. By late 2018, Bitcoin’s price had plummeted by approximately 80%, and the overall cryptocurrency market capitalization shrank from over $800 billion to below $200 billion. The market was still very young and was experiencing a heightened level of regulatory scrutiny, particularly in Asia. There was also a large-scale hack on Coincheck, costing investors some $530 million in losses, which led to greater caution and fear across the market.

Are we approaching crypto winter?

Following several weeks of geopolitical tension and market upset, the question the crypto community is asking itself is, is this the beginning of a crypto winter, or just another cold snap? According to Coinbase’s April 2025 Monthly Outlook, signs are emerging that suggest a longer chill might be setting in. Bitcoin and the COIN50 index have both fallen below their 200-day moving averages, often the sign of a bearish market. The report points out that “market sentiment has deteriorated meaningfully”, as the total crypto market cap has dropped 41% since December 2024 from $1.6 trillion to $950 billion. The broader backdrop of tariff tension sparked by President Donald Trump isn’t helping matters, as all markets, traditional and crypto, have been affected by recent announcements. 

But, it’s not all doom and gloom. As with nature’s seasons, winter comes and goes. Coinbase’s outlook is also cautiously optimistic for the second half of the year. “We view the current environment as one where a defensive stance is warranted in the short term, but a tactical approach could prove rewarding,” the report states. In other words, while current conditions might get worse before they get better, there is likely opportunity on the other side of this downturn. The resilience of Bitcoin, increased institutional interest, and the ongoing development of crypto infrastructure around the world may contribute to a more stable environment in the subsequent quarters.

Is there a positive side to crypto winter?

Absolutely. While crypto winter is often portrayed in a negative light, it also presents ample opportunities. For example, it is a great time for discovery, as investors looking to get involved in the crypto game can explore the market while prices are more subdued. Lower valuations offer entry points that simply don’t exist during bull runs. It is also a time where fundamentals begin to matter again, and whitepapers, roadmaps and real-world utility take precedence over marketing hype and speculation. Many of today’s strongest projects, such as Polkadot and Chainlink were launched and gained traction during bear markets. 

Solana was launched at the end of 2018 amid one of the hardest crypto winters. Seven years on and Solana is known as the fastest blockchain in the world. Crypto winter is also a great time to research altcoins, explore emerging technologies like DePIN or AI-integrated chains, and understand the long-term vision behind new protocols. As the market begins to consolidate, those who have done their homework could emerge stronger when the market turns, armed with the knowledge needed to understand the newest projects with real value. 

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