The words “crypto winter” are enough to send shivers down the spine of any investor. This is because it signifies only one thing: loss of value and diminished revenue. And while you’re well aware that not every trading venture is going to be successful, a prolonged period of plummeting prices is a whole other thing. After all, this is something you can’t control, and predictions cannot accurately determine when it’s going to end.
Unfortunately, the crypto world is currently traversing a period of reduced prices. Due to global troubles relating to military conflict, the pandemic, as well as the incoming energy crisis, it’s difficult to estimate with precision the exact moment the crypto winter is going to leave room for spring. In the meantime, however, you must be sure to make sound financial decisions that ensure you can see these trying times through – and emerge from them a stronger, smarter trader who’s better equipped to handle any shift in the market.
While it is generally not advisable to fall into the trap of going in the mold of other traders, as FOMO can easily lead you to make ill-advised choices, the behavior of other investors is generally a marker of how well an asset is doing. If you’ve been thinking about abandoning the crypto ship, selling everything, and acting as if you’ve never had anything to do with the blockchain in the first place, you may want to reconsider your plans. The fact is, crypto is as relevant as ever.
In fact, surveys show that 56% of respondents declared they were interested in buying cryptocurrency within the following year. 50% are motivated to start a digital money venture, lured in by the prospect of making money from their investments, and around 40% of those between 18 and 35 plan to use crypto for the purchase of goods and services. With these stats in mind, it’s clear to see that cyber coins have enduring appeal for traders.
Due to this trend, you don’t want to eliminate digital money from your portfolio. After the current bear market picks up speed and shapeshifts into a bull, you’re going to regret giving up on your coins. Remember their ability to preserve value in the long term and hold on to what you’ve got.
Avoid the chop
It’s no shock that the current market is not the best for traders, especially newcomers. If you’ve just started your career as a cryptocurrency trader, it’s easy to feel discouraged and like you want to throw in the towel. But it’s not necessary to take such drastic measures to avoid the choppy waters of the current market.
The best course of action is to avoid day trading and stop tracking your portfolio at all times. Yes, it may sound counterintuitive, but it’s actually a winning strategy. When you’re constantly looking for changes, you’re going to start feeling frustrated and restless. It’s more likely that you’re going to rush into decisions that look good at present but aren’t going to help you in the long term. Moreover, if your portfolio is deflating, it can be downright depressing to receive constant reminders of how much you’ve stooped from your all-time high.
If you’re trading in ETH, you can keep track of the Ethereum price USD on your exchange so that you can be updated on any intervening changes. You don’t want to cut yourself off completely, lest you miss a favorable opportunity for Ethereum trading. But taking a step back and adopting a more realistic approach is definitely going to be helpful.
Exploit the moment
While it can seem difficult to notice, there’s a silver lining in the current situation. When bull markets are flourishing, focusing on building anything more concrete can be challenging. You’ll feel swept in the amazing promise of the price bubble. A bear market is a great opportunity to break free from that mindset and move toward a different strategy.
Instead of just focusing on buying or selling coins, you can do some research and discover startups or developer communities that are creating something meaningful. When you allocate funds to something you trust, you’re also likely to see profits rolling in in the not-too-distant future.
When you’re looking to buy or sell, keep in mind that volatility is still very much present. However, when you’re aware that fluctuations are always going to be present and you contrast your digital money with other assets, you’ll notice your portfolio becomes much stronger and more stable. This is because even if one investment gets devalued at one point, others are still going to maintain their prices and therefore ensure you don’t fail.
While in a bull market, you might be tempted to make impulsive decisions and jump into trades headfirst, in a crypto winter situation, you’ll have to evaluate each project more carefully. You need to avoid scams, which tend to be all the more common during times of crisis. Before you decide to invest, make sure you know where your money is going.
The rapidly shifting prices can leave you feeling like you’re not in control of your own funds. While you are more than free to make any kind of adjustments you deem necessary to help improve your portfolio, you might want to HODL onto it. This is particularly important in the case of well-established names in the market that are definitely going to jump back from this slump. Downturns have occurred before in crypto’s relatively short history, and while they can be quite destructive for some, they are also generally temporary. A few well-placed moves can guarantee you won’t be reeling for long from the effects of this slump.
This might actually be the best time to buy more, as the rule of thumb dictates that you “buy low, sell high.” If you go in this direction, you’re going to witness your portfolio substantially grow in value as the markets recover.
When you’re a trader, there are many things you need to keep in mind. Keeping a watchful eye on market changes is just one of them, but it might also be the most important.