How can investors prepare for a crypto winter according to Mark Yusko?

Crypto Winter Is Here: Mark Yusko Reveals What’s Next for the Market

After a meteoric run into 2024 on the back of spot Bitcoin ETF approvals and the Ethereum Dencun upgrade, crypto’s momentum has cooled. Drawdowns, thinner liquidity, and selective bid are signaling a classic “winter” phase. Mark Yusko-CIO and founder of Morgan Creek Capital Management and a co-founder of Morgan Creek Digital-has long framed digital asset cycles as seasons. In his playbook, winter is not an end; it’s the reset that sets up the next expansion. Here’s how his framework applies now, and what to watch next across Bitcoin, Ethereum, and the broader web3 stack.

Why Yusko Calls It “Winter”: The Cycle and the Liquidity

The four-year Bitcoin cycle still matters

• Historically, Bitcoin’s halving concentrates returns in post-halving windows, but with heavy volatility and mid-cycle corrections.
• Past cycles featured deep drawdowns before renewed price discovery: 2013-2015, 2018-2019, and 2022 were brutal resets that later birthed major innovations (exchanges, DeFi, L2s).
• Winter ≠ permanent bear: it’s an accumulation and builder’s phase where fundamentals compound while prices consolidate.

Macro liquidity is the gravity

• Risk assets, including crypto, track global USD liquidity, real yields, and funding conditions.
• ETF access broadened the buyer base in 2024 (spot Bitcoin ETFs in the U.S.; spot Ether ETFs followed later in 2024), but net flows can oscillate with macro and positioning.
• Yusko’s lens: when liquidity tightens, quality outperforms; leverage and long-tail tokens get repriced first.

Key Signals Yusko Watches in a Crypto Winter

• ETF net flows: Sustained inflows to BTC/ETH spot ETFs signal durable institutional demand; outflows often align with macro risk-off.
• Stablecoin supply: Expanding aggregate supply typically leads crypto prices; contraction implies risk aversion.
• On-chain cost basis: Realized price, MVRV, and NUPL help gauge whether holders are underwater or in profit, informing capitulation risk.
• Miner health: Post-halving miner revenue pressure can trigger hash-rate dips or treasury sales; watch hash price and miner reserve balances.
• Derivatives stress: Elevated funding, crowded basis trades, and high open interest increase liquidation risk during drawdowns.

What’s Next: Yusko’s Scenarios for 2025-2026

1. Base case: Grinding accumulation, quality leads. BTC and ETH defend higher lows as liquidity ebbs and flows. BTC dominance stays elevated until conditions favor a later alt rotation. Venture and infrastructure tokens with real traction hold up better than narrative-only plays.
2. Upside case: Liquidity wave + institutional adoption. Improving macro liquidity, continued ETF penetration, and tokenized T-Bill migration into DeFi treasuries pull new capital on-chain. BTC revisits prior highs first; ETH and scaled L2s follow.
3. Downside case: Leverage flush and miner stress. A sharp macro shock triggers outflows, OI wipes, and miner capitulation. Prices overshoot down; strongest balance sheets buy the dip.

Rotations to watch

• Bitcoin and “digital gold.” Simpler thesis, cleaner flows via ETFs, and institutional mandates keep BTC the cycle’s bellwether.
• Ethereum + Layer-2 economies. Dencun (EIP-4844) slashed L2 data costs in 2024, enabling consumer apps, payments, and cheaper DeFi. Watch L2 revenues, sequencer decentralization, and shared/security restaking models.
• Real-World Assets (RWA). Tokenized funds and Treasuries (e.g., on-chain money market products and the growth of tokenized U.S. debt instruments) expand the addressable base and collateral quality in DeFi.
• DePIN and data infrastructure. Storage, compute, and wireless networks with real demand can compound through winter if subsidies give way to sustainable usage.
• Web3 gaming and creator economies. Unit economics over vanity metrics; look for titles with retention and on-chain sinks, not just token emissions.

How to Navigate This Winter: A Yusko-Inspired Checklist

• Prioritize quality: BTC, ETH, and top infra with real users, cash flows, or clear product-market fit.
• Stagger entries: Dollar-cost averaging reduces timing risk in choppy ranges.
• Watch liquidity: Track stablecoin supply, ETF flows, and funding conditions before sizing risk.
• Cut leverage: Volatility in winter punishes overextended positions.
• Extend runway (builders): Ship features users pay for; optimize infra costs; stay security-first.
• Custody discipline: Use reputable venues and cold storage; diversify counterparty risk.

Conclusion: Winter Sets Up the Next Breakout

Mark Yusko’s core message is consistent: crypto’s seasons are driven by adoption curves and liquidity cycles. Winter feels uncomfortable, but it is when value accrues to resilient networks and when the strongest builders separate from the pack. Keep a close eye on ETF flows, stablecoin supply, miner health, and on-chain usage. Position into quality, respect risk, and let the cycle do its work-because in this market, spring has historically followed winter.

Note: This article is informational and reflects market frameworks commonly associated with Mark Yusko; it is not investment advice.