The crypto winter is not a short-term event that resembles a price correction. It started in May and it does not seem to be ending any time soon. While it is hard to analyze the current market situation with a cold heart, we need to look at the reasons why the winter continues rolling with the same momentum.
There are fundamental reasons like the global economic recession which is, in turn, caused by several factors including the COVID-19 pandemic that severely affected international trade and still runs rampant in China. The Russia-Ukraine war was another blow to many economies with the European Union set to suffer the most from the upcoming energy crisis. It is just a very bad moment for any financial activities.
The stock market has been also falling with some indices seeing dramatic reductions in evaluations. The market of commodities is being desperately controlled by international organizations, but some prices are positioned to just run away from any control and shoot through the roof. Many fiat currencies are losing value, but the US Federal Reserve policies are scaring away people who would like to hedge against fiat by investing in crypto.
Tightening regulations in the US and Canada do not help the situation in the slightest. Events and moves that counter all of the above are not strong enough to stop the crypto winter. To make things worse, leveraged trading that should allow traders to capitalize on shortening BTC leads to even more price drops due to the nature of margin trading in the crypto industry. Bitfinex, FTX, Binance, and many other exchanges and brokers offer margin trading accounts.
Many people open leveraged positions by borrowing BTC and exchanging it for USDT creating a situation where the price drops leading to a feedback loop in which more short positions lead to more price drops. Many exchanges and brokerage services that allow people to use leveraged positions are seeing a huge surge in short positions. With more such positions opening, the price of BTC can only go down without a new influx of hopeful investors.