The cyrptocurrency’s continued slide has raised fears of an impending ‘crypto winter’, which is marked by a decline in trading volume and reduced investor sentiment. Here is what to know
Continuing a slump which began two months ago, Bitcoin sank well below $85,000 on Monday (December 15), according to Coinbase data. Long regarded as the bellwether of the cryptocurrency market, Bitcoin has plummeted from its all-time high of $126,000 in early October, with the resulting crash wiping $1 trillion from the crypto market.
The slide has raised fears of an impending ‘crypto winter’, which is marked by a decline in trading volume and reduced investor sentiment. Here is what to know.
First, the basics.
CRYPTOCURRENCY: Cryptocurrencies are essentially digital tokens, a version of digital currency that allows people to make payments directly to each other online without any intermediaries.
Traditional currencies like the Indian rupee or the US dollar are called fiat currencies: they are typically issued by the central bank of the country and accepted as legal tender. In contrast, cryptocurrencies do not have any intrinsic or legislated value, and their value is determined by the market demand for and supply of such currency.
BITCOIN: Bitcoin is arguably the best-known cryptocurrency, launched in 2009 by the mysterious Satoshi Nakamoto. It was designed to mimic the features of a cash transaction electronically.
Crucially, the supply of Bitcoin increases at a predetermined rate, and has a ceiling of around 21 million Bitcoin. Each bitcoin can be divided into 100 million satoshis (1 satoshi = 0.00000001 bitcoins).
BLOCKCHAIN: Bitcoin and other cryptocurrencies like Ethereum aim to eliminate established intermediaries such as banks to enable instant transactions and reduce costs. To achieve this, they rely on blockchain technology.
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A blockchain itself is a digital database or ledger stored across a network of computers that is, in theory, transparent and tamper-proof. Its name is intentional, with each block representing a chunk of data, and connected to each other in a chronological chain using cryptography. While any manner of information can be stored on a blockchain, blockchains are popularly used to record and maintain transaction ledgers.
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In contrast, commercial banks maintain a record of the account balances and transactions of their customers.
What explains Bitcoin’s downward slide?
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Why fears of a ‘crypto winter’ may be exaggerated
Typically, Bitcoin’s valuation has followed a four-phase cycle spread over four years, culminating in an event called Bitcoin halving. During this period, the bitcoin rewards granted to their miners (the parties that keep the currency functional) are cut in half, thus reducing the bitcoin supply in the market. This is done to ensure that only 21 million bitcoins will continue to exist. The last halving event happened in April 2024.
Usually, bitcoin proceeds to rally in the months following a halving event to reset and reach a new high. It would then fall by 70% to 80% from this peak, triggering fears of a crypto winter, marked by low crypto prices. This would set the stage for the next halving event and the next cycle.
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Thus far, the currency has not shed its value this drastically. This may be credited to two factors that have unfolded since last April: On one hand, the US allowed the trade of Exchange Traded Funds (ETFs) with Bitcoin as the underlying asset. These ETFs track Bitcoin’s price movement without an investor needing to actually own the cryptocurrency itself. This has connected investors trading on traditional stock exchanges with Bitcoin. Bitcoin ETFs, which launched in January 2024, are the largest bitcoin holders with over 1.4 million coins as of July 2025, representing 6.8% of the 21 million cap.
On the other hand, Donald Trump’s return to the White House this January has installed a crypto-friendly administration. The US president signed an executive order for a bitcoin reserve in March, while the GENIUS Act, signed in June, introduced a regulatory framework for stablecoins, a form of cryptocurrency pegged to an asset.
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