Bitcoin’s 50% Drop Tests Markets as Retail Investors Continue Dip Buying

Investors selling on Coinbase continued to buy dips on market volatility, as warnings of a harsh crypto winter emerged.

Since reaching a record high last October, Bitcoin has lost nearly half of its value. As it continues to struggle below $70,000, the weakness is causing fears of another crypto winter.

But despite the ongoing volatility in the market, trading activity on Coinbase has remained stable, according to Brian Armstrong.

The Post-October Slump

In a recent tweet, Coinbase’s CEO said the platform’s data shows that retail users have continued to buy despite the price drop as holdings of the native unit across Bitcoin and Ethereum have increased. Armstrong added that most retail customers held balances in February equal to or higher than their December levels, as the participation of small investors in Coinbase remained stable.

Although sales activity appears to be strong, market analyst Mippo cautioned that the broader market outlook remains fragile. Mippo said that the current conditions point to the beginning of a “full crypto winter,” which has the potential to match the severity of the bear market of 2022 or even the decline seen in 2019. He attributed the near-term pressure to an “air gap” created by a previously unmeasurable measurement near the dynamic control point.

He said historical crypto valuations were driven more by perceived cash flow than business fundamentals, as regulatory uncertainty made it difficult for projects to generate consistent revenue or cash flow. Prices were often set by how much money was chasing a limited supply of tokens tied to the most popular issues of the time, with high-risk themes commanding high valuations.

According to Mippo, this framework is now breaking down as regulatory mechanisms for crypto projects become more transparent, starting with stablecoins and expected to extend to a wider range of tokens.

Although he pointed out that this change in the rules is good in the long term, Mippo said that it creates challenges for projects whose evaluation is mainly based on speculation. As the generation of complementary income takes place, he explained that market participants focus more on cash flow, which has led to a re-evaluation of the values ​​of tokens that were set too high below previous considerations. This helps explain why on-chain activity and underlying usage may increase as token prices continue to decline, he added.

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Mippo also said that crypto is “completely abused by AI,” while adding that the speculation of the meme character is starting in the industry, and that crypto failed to create useful products at that time.

Therefore, he estimated the ratings reset could continue for another nine to eighteen months before broader market conditions begin to improve.