Former Coinbase Director: Crypto winter will improve in the second half of 2023
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Former Coinbase Director: Crypto winter will improve in the second half of 2023
This bear market is not caused by a black swan, but rather the result of rising interest rates.
Navigating Web3 tides with focused insightsWritten by: Tom Loverro
Translated by: TechFlow intern
The crypto winter has arrived. I served on Coinbase's board until 2021 and led IVP's Series D funding round. I've been living through crypto cycles since 2013, and here is my prediction on how and when this current crypto winter will end—and what lies ahead.
Crypto will go even lower in 2022, and remain range-bound at depressed levels throughout 2023 until confidence is fully drained—heralding the long-awaited spring thaw (described below). The crypto macro outlook will begin improving in the second half of 2023. Here’s my reasoning:
Many VCs and crypto investors are suffering from the "halo effect" bias—they expect BTC to rebound quickly, just as it did after the 2020 Covid black swan event. But this bear market wasn't caused by a black swan; it's the result of rising interest rates. Therefore, these investors will continue to suffer until interest rates stabilize.
Historically, it takes about 12 months from the peak of a crypto cycle to reach the bottom. I expect a similar pattern this time, with BTC’s peak having occurred in November 2021.
The bottom doesn’t come during fear or disgust, but only after patience and confidence have completely evaporated—when crypto is no longer headline news and speculators have left the scene. This process will take many months.
Human psychology shapes this timeline. Crypto price movements are still driven by curious, profit-seeking retail investors—who are entirely absent today. Now is therefore the time to prepare and think. During bull markets, you upgrade infrastructure to keep servers running. During bear markets, you innovate and capture market share.
At Coinbase, we used the 2018–19 downturn to accelerate product innovation and challenge our existing assumptions. We made tough decisions, and emerged stronger when the upturn came.
Crypto will rebound when retail investors discover new applications and use cases—especially those enabled by innovation at the protocol and infrastructure layers (lower transaction fees, easier development). IVP is excited to back the next generation of crypto innovators.
My advice today: Have enough cash to last 30–36 months. More importantly, have enough conviction to endure this winter. Don’t waver or chase non-crypto opportunities. In the next bull market, crypto will be stronger than ever before.
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