This ‘crypto winter’ is unlike any downturn in the history of digital currencies. Here's why

cnbc.com:

The two words on every crypto investor's lips right now are undoubtedly «crypto winter.»

Cryptocurrencies have suffered a brutal comedown this year, losing $2 trillion in value since the height of a massive rally in 2021.

Bitcoin, the world's biggest digital coin, is off 70% from a November all-time high of nearly $69,000.

That's resulted in many experts warning of a prolonged bear market known as «crypto winter.» The last such event occurred between 2017 and 2018.

But there's something about the latest crash that makes it different from previous downturns in crypto — the latest cycle has been marked by a series of events that have caused contagion across the industry because of their interconnected nature and business strategies.

Back in 2018, bitcoin and other tokens slumped sharply after a steep climb in 2017.

The market then was awash with so-called initial coin offerings, where people poured money into crypto ventures that had popped up left, right and center — but the vast majority of those projects ended up failing.

«The 2017 crash was largely due to the burst of a hype bubble,» Clara Medalie, research director at crypto data firm Kaiko, told CNBC.

But the current crash began earlier this year as a result of macroeconomic factors including rampant inflation that has caused the U.S. Federal Reserve and other central banks to hike interest rates. These factors weren't present in the last cycle.

Bitcoin and the cryptocurrency market more broadly has been trading in a closely correlated fashion to other risk assets, in particular stocks. Bitcoin posted its worst quarter in more than a decade in the second quarter of the year. In the same period, the tech-heavy Nasdaq fell more than 22%.

That sharp reversal of the