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An icy chill has blown through the cryptocurrency market in recent months, threatening to cut the industry’s golden era short.
Last year, boosters forecast Bitcoin would reach $250,000 by the end of 2025, roused by President Donald Trump’s promise to make America the “crypto capital of the world.” But the coin has dropped 25% since early October, trading at around $92,000, with Ethereum’s price down by almost one-third, hovering above $3,000. The total crypto market capitalization has shrunk by about a quarter over that period, shedding more than $1 trillion.
In Wall Street terms, crypto is in a bear market — when an asset drops 20% from a recent peak. But industry onlookers are asking whether the downturn might be turning into something far more dreaded: a “crypto winter.” The term describes “a particularly painful type of bear market when prices drop for months on end and confidence in the entire asset class seems to evaporate,” according by the Motley Fool.
Whether the sell-off amounts to a full-blown winter or just a temporary chill may be revealed by looking at previous hibernations — and where one looks for signs of life in the market.
A sudden chill
By early October, Bitcoin’s price was at an all-time high, having doubled in a year, buoyed by Trump’s second term.
Catalyzing the downturn was a “flash crash” on October 10 after Trump threatened fresh tariffs on Chinese imports, causing traders to dump risky assets like crypto and AI stocks in favor of safe havens like gold and silver, which are both trading at record highs. Bitcoin dropped 10% in a week.
Amplifying the shock was the highly-leveraged positions of crypto traders — one of the industry’s riskier practices. The tactic multiplies both returns and losses, as trading platforms seize traders’ collateral — a process known as liquidation.
The day of Trump’s tariff announcement, the crash resulted in more than 1.6 million crypto traders facing liquidations, and a record $19 billion in liquidated positions, according to data analysis from CoinGlass.
Orderbooks have gotten thinner in the aftermath of the liquidations, which hurt many market makers in the space, Peter Chung, head of Presto Research, told CNN in an email.
The market has struggled to regain momentum since.
“Bitcoin is under pressure in line with other risk assets (see the price actions of the AI stocks), but its downside is amplified due to a crypto-specific factor,” Chung wrote.
The crash came just as concerns were rising that crypto’s bull market was coming to an end. Hype around July’s stablecoin legislation, known as the GENIUS Act, had died down, while uncertainties around tariffs, interest rates and a possible AI bubble are rising. When the stock market is volatile, riskier assets like crypto appear less attractive to investors.
Winter isn’t here (yet)
Will this icy spell necessarily progress into full-blown winter, where prices continue to drop for months on end?
This would make sense. Historically, when bull markets have ended, crypto winters have followed.
Yet, in those cases, downturns have only been classified as “winters” when Bitcoin sits about 70%-80% lower than its all-time high, according to CNBC. With the coin only 25% lower than its record, according to this measure, we aren’t there yet.
There’s reason to think Bitcoin may not plummet to those wintry depths. In the past, Bitcoin’s price has moved in “cycles,” due to an event that occurs every four years called the halving, which cuts the daily supply of newly minted coins by 50%.
The last occurred in April 2024, meaning we’re mid-cycle. This has historically been a time when corrections of 20-30% have occurred before prices continued to rally.
“Looking at previous cycles, volatility of this magnitude appears consistent with long-term trends,” Jacob Joseph, senior research analyst at CoinDesk Data, told CNBC.
Crucially, however, previous mid-cycle corrections have remained within a “broader bullish structure” often holding above key technical levels such as its 50-week moving average, Joseph added. In November, Bitcoin closed lower than its 50-week moving average, a threshold that has been followed by prolonged bear markets, crypto analyst Tony Severino noted on X.
As crypto goes mainstream, the rules have changed
Still, the four-year cycle may no longer be a reliable gauge of price movements because of mainstream crypto adoption. This year, traditional retail and institutional investors have poured into digital assets, accounting for a larger section of the market.
Due to this, Bitcoin’s turns have increasingly tracked stock market sentiment this year. What’s more, as lofty AI valuations leave investors viewing tech stocks as riskier, speculative assets, bringing them closer to crypto, that correlation has strengthened even further.
In 2025, the correlation between Bitcoin and the the tech-heavy NASDAQ 100 index has more than doubled. Correlation is measured from -1 to 1, with figures above zero indicating a positive correlation. The average correlation this year was 0.52, up from 0.23 in 2024, according to LSEG data.
“One key prerequisite for any crypto to go up? Stock market has to go up,” says Mike McGlone, Bloomberg Intelligence’s Senior Commodity Strategist. “But I think [stocks] are going to be down next year, and cryptos are leading that way.”
The bear market McGlone forecasts won’t just be about frothy AI stocks aligning with valuations, but also about consolidating the crypto market, which has surged to over 37 million as of November.
“The bottom market is not going to come until you purge a lot of these silly cryptos,” he says. While McGlone isn’t sure yet how low Bitcoin will go, he think it’s more likely to reach $50,000 than $250,000.
Yet, JPMorgan analysts sung a different tune recently — arguing that the bull market remains — and rejected talk of a winter. Due to the institutional capital and real-world adoption of stablecoins, liquidity has deepened, they noted, which may makes the market less susceptible to the price swings and cycles of the past.
“Overall, we struggle to see these recent market pullbacks as emblematic of broader structural degradation within the crypto ecosystem, and thus we continue to be positive on the space,” the analysts wrote.