Cryptocurrency markets have an intriguing method of catching even experienced veterans off guard because each bear and bull market begins to show similarities to past cycles, only to take unexpected directions and erase the fortunes of the newly-minted cryptocurrency millionaires.
As a crypto-investor talking about an imminent crypto winter is alarming. After more than six months of bearish movement and falling prices, the market continues to fall. Bitcoin (BTC) trades at close to half its record high, and several other cryptocurrencies have dropped more. Consider the possibility of a receding economy and the effects of the ongoing tightening of economic policies, and we’re now forced to acknowledge that winter could be approaching us.
How to survive a winter of crypto?
One method to get through an extended period of price declines is to be aware that dips, even those that are prolonged, are typical for investing. This will help investors keep the perspective of decreasing prices and not panic selling. It is also important to limit as many additional risks as possible. Investment in cryptocurrencies is already risky, but the chances are even more significant during a bearish market.
Research
Many crypto-related developers and entrepreneurs have expressed the same thing, all looking forward to the opportunity to work creating cool things rather than being caught in the excitement of a bubble.
Melker says that even though they’re explicitly building a cryptocurrency startup, investors can benefit from the same approach. Melker suggests that now is the perfect moment for investors to “remove the FOMO and the concern about the price and the urge to flip from one coin to another.”
Staking
Staking is perhaps the most efficient method to boost the value of your portfolio for the long run and relieves the anxiety of worrying about prices daily as the staked asset accumulates tokens.
Most layer-1 protocols have the option of staking their tokens on the network to generate a profit, such as Solana ( SOL), Cardano ( ADA), Polygon ( MATIC), and Avalanche ( AVAX).
There are numerous alternatives to staking, from gaming protocols such as Axie infinity and Illuvium to marketplaces for NFT like LooksRare. So once an in-depth study has been done, and a sound project is selected, staking is an issue of setting it up and not forgetting about it.
Lose-proof your investments
The most important thing to remember when purchasing high-risk assets is to make purchases with money you’re willing to lose. You’ll need to meet other objectives if you buy crypto with funds. A total financial collapse of crypto could ruin your long-term goals. There is a chance that you’ll have to sell your investments for a loss since you aren’t able to afford to wait for prices to rise again.
Make other priorities your top priority, like making the reserve fund for emergencies or paying off the debt you owe, regardless of investing in crypto. In addition, make sure your crypto investment does not constitute more than a small percentage of your overall portfolio. If the crypto market fails, it will be able to provide more secure investments to fall back on. When the demand for crypto recovers, it is possible that prices will rise again. But, they could not, so don’t put your money on your house.
Get ready for more price drops
There’s often a chorus for people to “buy the dip” on social media when prices for the crypto drop. This may be logical in certain circumstances, but plenty of cautions exist. In addition, prices could decline further if you’d bought into the plunge in January when Bitcoin was down by about one-third from the November high, and you’d be facing massive losses today.
Confident investors employ dollar-cost averaging, buying smaller amounts at frequent intervals to even out the fluctuation. Instead of purchasing Bitcoin worth $1000 in one go, the dollar-cost averaging process could involve paying $100 over a set period. This way, you won’t be trapped trying to predict the market. Eventually, you’ll be able to purchase BTC at a lower price if the price goes down.
Avoid shorting cryptos
Traders make money by shorting cryptocurrency by taking advantage of falling prices. Theoretically, it would be a great choice in a bull market when price drops are standard.
However, the majority of experts from the industry will warn you against trading short on Bitcoin or other cryptocurrencies since doing so could cause exponential losses or even the liquidation of your investment.
Review the current status of the market
It is crucial to stay alert to the actual position during the bear market in winter. This will give you the best chance to position yourself correctly while acting swiftly and limiting losses. Based on the KuCoin exchange, most cryptocurrency markets traded sluggishly as the market value is $1.09 trillion, down 1.33 percent from the previous day.
The total trading volume for the last 24-hour period totaled $44.71 billion, which is a 35.18 percent decrease. The total volume of Defi was $5.00 billion, which is 11.15 percent of the overall 24 hours of the cryptocurrency market. The total amount for stable currencies is $40.58 billion, representing 90.75 percent of the 24-hour cryptocurrency market.