How to Get Through the Tough Crypto Winter?
The crypto market is like a roller coaster. It attracts and delights people with many huge wins while they can suffer from costly pitfalls. This crypto winter can be the first challenging experience for new investors.
Bitcoin had started at around $48,000 at the beginning of the year. Then, it encountered a historic drop to under $18,000. It now reaches back to approximately $22,000, which still counts as a loss of around 55% in a year. Ethereum is no exception when it falls from $3,800 to $1,700 this year.
And we all have seen this film before! The market has been through many crashes in history, yet the crypto winter this time has its different notes. The participation of both new and experienced investors creates a complex mix of flawed expectations and common crypto market fluctuations.
While the media serves a bunch of information, investors still do not have a filtering system to focus on important signals of systematic risk. So, how long will spring come to the crypto world? What should we do to survive this crypto winter?
Crypto Winter: What Do You Know About It?
Crypto winter simply refers to the time when the cryptocurrency market goes down. It is the same with the bear market when describing the gloomy stock market.
It is a brilliant name to depict the vibe of what the downfalls of crypto’s prices create — Cold and Depressing. Also, investors seem to be able to do nothing amidst the crypto winter. Thus, people attach this period as a waiting game for those who lose confidence in the state of the market.
The Current Crypto Winter: Why Is It Different?
The reaction to the crypto market’s crash seems louder. The fascinating period of cryptocurrency made many novice investors consider it a bargain, which was a great welcome. Thus, the influx of new investors and their first-hand experience with the crypto winter afterward put on the echo.
Many investors who first joined the crypto market expected it to behave differently from stocks amidst the rising interest rates and inflation. Yet, it did not happen as the crypto market was under the severe influence of many significant financial events. As a result, those investors’ frustration and confusion were higher.
It is the fact that high volatility comes along with higher returns in the tradeoff of higher potential losses. So, the tumultuous market of cryptocurrencies is an attraction to many investors who are willing to take risks.
How to Survive This Crypto Winter
It is harsh, yet you can still enjoy it if you know the right how-tos. The way out can be a shift in mindset, changes in technical approaches, etc. Yet, the underlying principle that works every time, both favorable and challenging periods, is to get back to the basics.
It can be a surprise for some investors because it is an old lesson that they should have learned. Here are some recommendations that you can make the best out of such a gloomy period.
Diversify Your Portfolio
Diversification is the top priority in investing. You do not want to lose it all when only the crypto you invest in fails. So, it is crucial to building a portfolio with various assets, index funds, etc. to back you up financially and mentally.
Also, the market crash has had a profound impact on many assets, yet not all of them. There must be stocks or other assets swiftly getting through with not only breakevens but also profits. Thus, diversification of your investment portfolio is key to unlocking consistent profitability no matter how volatile the market is.
Make Downturn Your Downtime
A bear sleeps throughout the winter to save and recharge energy. We can do the same when stepping into the crypto winter. Yes, it is an arduous period but to keep whining about the situation does not help. Instead, you can take this downturn as your downtime to take a breath and cool your mind.
Strengthening your foundation, upgrading technologies, learning new techniques and strategies, etc. are what you can do during the ‘bear market’ of the crypto space. Busy schedules with such activities to enrich your knowledge and skills can save you from depressing thoughts about the cryptocurrency market’s status quo.
Moreover, it equips you with effective techniques and strategies to grab chances when the crypto market reaches back to its prime time. Things will change as you change the way you look at things. This crypto winter generates harsh effects, which is true. Yet, if you take it as a chance to consolidate your investing foundation as the rush of the crypto market slows down, things can work out so well.
Do Your ‘Homework’
Investing is a long-term thing so make sure you pick the crypto projects that have sustainable growth. To achieve this goal, you must do some research to uncover which crypto coins or projects are the most potentials. Many investors choose to invest in the big names in the crypto world, such as Bitcoin and Ethereum, to have a stronger guarantee of profits.
Yet, things can go awry as even Bitcoin and Ethereum are also in ‘bad moods’. And losses are common sense. Data-driven research and analysis can save you from biases and dominant trends in the crypto market. Keep track of the financial market and price movements for insights into your next moves.
What Goes Up Will Go Down Some Time
Investors should bear in mind that downtime is inevitable, not only in cryptocurrencies but also in other assets. Thus, instead of keeping you in a desperate state, prepare a plan for the worst to enjoy the best.
Crypto winter can be a horrible ongoing nightmare or a relaxing downtime. It is up to your point of view and how you spend this time. Complaining about the depressing crypto market will only maintain the gloomy vibe. Yet, learning new techniques and getting back to the basics can light up the atmosphere. Also, it builds your confidence to grab the optimal moments when spring comes.
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