A crypto recession is a prolonged and substantial decline in the cryptocurrency market, marked by several distinct features:
Key Characteristics:
- Prolonged Price Declines: Major cryptocurrencies, such as Bitcoin and Ethereum, experience significant losses in value over an extended period, often lasting weeks or months.
- Declining Trading Activity: Market participation wanes, with fewer trades occurring as investor interest and market engagement diminish.
- Diminished Investor Confidence: Pessimism spreads across the market as investors fear further losses, leading to a retreat from risky assets.
- Collapse of Projects and Exchanges: Crypto startups and platforms face financial struggles, leading to bankruptcies or closures, further shaking market stability.
- Stagnation in Innovation and Funding: With a shrinking market, venture capital becomes scarce, resulting in fewer new projects and slower technological advancements in the space.