The cryptocurrency market goes through cycles similar to the stock market. Just like the bear phase in a stock market, when negative investor sentiment drives prices sharply lower for a prolonged period, the crypto market can go on a downward spiral. When prices drop without any recovery in sight for over a year, it is called a ‘crypto winter’.

The crypto market is falling hard and fast with multiple double-digit drops in the value of Bitcoin and many leading alternatives. The price of the world’s leading crypto asset has dropped 68% from its all-time high of $69,044 to around $22,000 at the time of writing. Other digital assets have fared even worse, with Ethereum down more than 75%, TRON falling 76%, and SOL and AVAX both down by a stunning 88%.

Since the stable coin meltdown of early May, all eyes have been on Bitcoin (BTC). It’s the critical bellwether for the cryptocurrency market, and before the big downdraft earlier this week, the price of BTC had been struggling to remain near the psychological threshold of $28,000.

But it’s not just Bitcoin that’s been feeling downward pressure. Ethereum (ETH) and other leading altcoins, such as Cardano (ADA) and Polygon (MATIC), are all off more than 60% year to date.

Meanwhile, major global crypto exchanges such as Coinbase and Gemini announced hiring freezes and layoffs in early June. Shares of Coinbase have fallen 86% from their 52-week highs, and the company has announced plans to lay off roughly 18% of its workforce as the crypto market joins the U.S. stocks in a bear market.

Defining the phrase even more literally, crypto winter is when prices contract and remain low for an extended period. Analysts believe the wheels of the emerging crypto winter were set in motion earlier in 2022.

“The crypto market was already feeling the effect of world events, especially the Russia-Ukraine conflict that caused turmoil in global finance,” says Igor Zakharov, CEO of DBX Digital Ecosystem.

Zakharov notes that high inflation has driven rising interest rates in the U.S., which is the most significant player in crypto. “By the time TerraUSD and Luna collapsed and set in motion a domino effect in the crypto world, crypto winter had already begun,” he says.

Since November 2021, the crypto market has dropped 60%, drastically falling from $3 trillion to less than $1 trillion, as of this writing.

During crypto winters, digital assets can lose a massive chunk of their value. For instance, the last such episode that ran from early 2018 to mid-2020 saw Bitcoin lose more than 87% of its value at one point, compared to its then all-time high.

The good news is that historically at least, the crypto winter has traditionally always been followed by a strong bull run that sees Bitcoin and various altcoin projects hit new all-time highs.