The constant price drops in cryptocurrencies have not only represented a blow to their users’ finances. Still, they have also contributed to the Crypto Investors by beginning to create new strategies that allow them to secure their investors’ capital in a certain way.
Coinbase is one of the Exchanges that has been most affected during this downward trend that cryptocurrencies have experienced. It is no secret to anyone that brokers not only work with the capital of their investors, but that falls also affect their savings funds.
What is crypto winter?
The economic and financial scenario that currently precedes the digital financial market is vulnerable enough to drive down the prices of CRYPTO ASSETS, dragging down even the most stable and listed ones, such as Bitcoin and Ethereum.
The rise in interest rates, inflation that does not decrease and a war that does not end are some of the factors that have contributed to the fact that the value of cryptocurrencies does not stabilize and tends to fall more and more.
We have seen how Bitcoin has decreased in value by almost 50%, which is positive for no investor, much less the Exchange.
When speaking of crypto winter, strict reference is made to a constant downward trend in the price of digital assets, which despite its volatility, does not contribute, making the results have a more significant negative impact on its users.
The impact of the crypto winter on the financial market
Various Exchanges have positioned themselves over time among investors as some of the safest and most transparent options for doing cryptographic negotiations.
But the current situation in the digital market is not the most optimistic. Prices may enter a crypto winter, where the platforms fear that their services will be less attractive since the risks involved in crypto investments are too high.
It is essential to highlight that the value of the price of cryptocurrencies significantly affects the operation of these platforms; among some of the Exchanges that are already beginning to react to this possible situation that directly affects them are Coinbase and Gemini, where the geopolitical situation and Macroeconomic factors are affecting the cryptocurrency market.
Such is the case of the Exchange Gemini created by Tyler and Cameron Winklevoss, two young entrepreneurs classified as the first to achieve fortune through Bitcoin.
They find themselves in the painful situation of reducing the payroll of the prestigious exchange platform since, according to the trajectory that Bitcoin and the other cryptocurrencies have traced, the crypto winter could not be a forecast but a fact.
For these two investment geniuses, cryptocurrencies are going through a period of contraction in which it is accentuated in a more significant proportion, where low prices stagnate and await a new trend that could take even months.
A new balance in the crypto market is expected, but, given this period that can last a long time or a short time, the entrepreneurs in charge of the exchange platforms are well subject to making drastic decisions to avoid their collapse operations.
According to specialists, the last crypto winter occurred between 2018 and 2020, a long period full of lows and constant decreases in the value of crypto assets.
What has been established is that periods like the one that Bitcoin and the other digital monies are going through turn out to be cyclical; that is, every so often, they repeat themselves until they increase in value again, and that is when investors begin to unite.
The effects of all external factors, and the constant need for governments to regulate cryptocurrencies and mining, mean that these digital assets are no longer alien to the convulsions of the traditional market.
The positive attitude of many investors may be that the crypto winter will not last that long or that the trend will change drastically and the market will stabilize, but it is all just guesswork.
Unemployment rates for cryptocurrency exchanges hover around 10-12% of their employees, which is quite unfortunate.
The biggest fear of the Exchange is to be declared bankrupt since its operations do not generate the necessary returns to satisfy the needs of all its clients.
Cryptocurrencies, just as they have generated tremendous profits, are facing a situation where they can continue to decrease in value. However, all financial periods are usually cyclical, and surely sooner than expected, we imagine normal operations will return where the balance point will be established.