Crypto is still struggling since the flash crash nearly a month ago.

Many investors are extremely fearful of a bear market.

Short-term price action isn’t anything to base your investment decisions on.

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Market cycles are a lot like seasons, because you can often feel a chill in the air well before the first snowflake lands. On that note, October’s crypto storm delivered that first shock of cold, complete with the flash crash on Oct. 10, and pessimism has spread fast. Investors are now arguing that the new bear market has arrived, and that everyone should head for shelter.

The case sounds plausible. This October was the first negative October for Bitcoin (CRYPTO: BTC) in years, and nearly all major crypto assets are still smarting, well below their highs before the flash crash, including leaders like Ethereum (CRYPTO: ETH), Solana (CRYPTO: SOL), and XRP (CRYPTO: XRP), among many others. Even the strongest coins look winded right now – so is this the start of a bear market, or worse, another crypto winter?

Image source: Getty Images.

There’s no point in denying that October hurt. The flash crash on Oct. 10 was the largest single-day wipeout on record for the entire crypto asset class, an order of magnitude larger than past episodes. Plus, Bitcoin notched its first decline in an October since 2018, a down month that dented confidence after a string of strong gains; the past 30 days’ decline of 19% is concerning (as of Nov. 6), but it came at a time when sentiment was already fragile.

But one month isn’t a clear sign of a bear market.

Zoom out a bit, and the picture is still mixed. Solana is down by 20% this year so far, Chainlink is down 33%, and, while they’re up for the year, Bitcoin, XRP, and Ethereum have all failed to outperform the stock market’s gain of 14% this year so far. When considering the mix of bullish catalysts that the crypto sector, as well as these specific coins, got this year, that weak performance is indeed pretty surprising, and it makes sense for investors to be concerned.

For instance, the same month that produced the flash crash also featured the single largest weekly inflow into global crypto exchange-traded funds (ETFs) on record, with an inflow of $5.9 billion in the first seven days, led by Bitcoin and also meaningful allocations to Ethereum. Flows turned choppy after the shock, but the pattern was not wholesale flight.

Aside from significant capital inflows, the macroeconomic picture is more likely to improve than to worsen.