Bitcoin’s 50% drop is testing the markets as retail investors continue their dip buying

Retail investors on Coinbase continued their buying declines due to market volatility, even as warnings of a harsh crypto winter emerged.

Since hitting an all-time high last October, Bitcoin has lost almost half of its value. As it continues to struggle below $70,000, the weakness is fueling fears of another crypto winter.

But despite continued market volatility, retail activity on Coinbase has remained steady, according to Brian Armstrong.

Slump after October

In a recent tweet, the CEO of Coinbase said said that the platform data shows that retail users have continued to buy despite price drops, as ownership of private units in Bitcoin and Ethereum increased. Armstrong added that a majority of retail customers in February maintained balances at or above their December levels as participation from smaller investors on Coinbase remained steady.

While retail activity appears resilient, market commentator Mippo warned that the broader market outlook remains fragile. Mippo said current conditions point to the onset of a “full crypto winter,” which has the potential to rival the severity of the 2022 bear market or even the 2019 downturn. He attributed the short-term pressure to the “air gap” created by previously unsustainable valuations alongside an evolving regulatory environment.

He argued that historical valuations of cryptocurrencies were largely driven by speculative capital flows rather than business fundamentals, as regulatory uncertainty made it difficult for projects to generate compliant revenue or cash flows. Prices were often determined by the amount of capital pursuing a limited supply of tokens tied to the most popular stories of the time, and higher risk themes required higher valuations.

According to Mippo, this framework is now unraveling as regulations for crypto projects become clearer, starting with stablecoins and expected to expand to a wider range of tokens.

While he viewed this regulatory change as positive in the long term, Mippo said it creates challenges for projects whose valuations were mainly based on speculation. As compliant revenue generation becomes possible, he explained that market participants are increasingly focused on cash flows, which has led to a reassessment of token prices that were set too high under previous assumptions. This helps explain why on-chain activity and fundamental usage can grow even as token prices continue to fall, he added.

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AI dominance puts pressure on crypto

Mippo also said that crypto is “absolutely under siege by AI,” while adding that the frenzy surrounding meme coin speculation is overtaking the industry, and that crypto has failed to build useful products during that period.

He therefore estimated that the reset in valuations could continue for another nine to 18 months before broader market conditions begin to improve.