Surviving The Crypto Winter – How To Push Forward And Become A Better Investor

Although there are no clear markers and guidelines on how much prices must fall before we can officially declare a crypto winter, it is generally agreed that the season sets in when there’s a prolonged period of decline in the value of cryptocurrencies, which makes it quite similar to the bear market seen in traditional assets. It usually starts with industry leaders Bitcoin and Ethereum experiencing a steep price fall that then ripples through the entire market. That’s why changes in BTC price can serve as an indicator of trends and developments in the sector. 

Judging by this description, it’s pretty obvious that the crypto winter is once again upon us, and it might be the coldest one to date. As all investors should know by now, crypto winters are all but inevitable. They have happened before, and they will happen again in the future. And every time they occur, certain analysts are quick to prophesize the demise of the cryptocurrency industry. That’s because compared to stocks and other conventional assets, digital currencies have a much shorter history, so there’s not enough data to clue us in on how the crypto winter might unfold or how long it’s going to last. But crypto winters past have taught us that they eventually blow over with the market entering a new bullish period after a while. 

However, since crypto winters can be quite scary, investors often need a better piece of advice than this too shall pass, or patience is key, as true as these two statements might be. As a crypto investor, it’s important to know what you’re dealing with and what you can do in order to weather the storm and come out of it wiser and stronger. So, here are a few recommendations to keep in mind. 

Stick to Established Cryptos

The crypto sphere currently comprises well over 10,000 digital currencies, and new projects constantly emerge, adding to that number. Some of these projects have stood the test of time, while others have only been around for a short while and have yet to prove their worth. In times of uncertainty like the ones we’re going through right now, it’s obviously best to stick to already established cryptocurrencies such as BTC or ETH that can maintain a certain degree of stability, as they have done multiple times in the past. 

Although they offer no guarantee, these cryptos tend to be less risky as they have better chances to withstand the ups and downs of the market. BTC and ETH are the two largest cryptocurrencies by market cap and popularity. In fact, these two coins alone account for more than half of the total crypto market capitalization, so they serve as the main pillars of the industry, and it’s highly unlikely they’ll ever collapse. They have a longer track record of success and are stronger than all other projects, so they make for a much safer investment overall.  

Determine risk and Diversify your Portfolio

All investments are risky, but it’s how you manage these risks that can make the difference between success and failure in crypto and every other market. When things go south and confusion seems to rule the crypto sphere, it’s time to go back to basics and let yourself be guided by the golden rules of investing. The first one says you shouldn’t invest more than you can afford to lose. In case you make a bad move, or market conditions are unfavorable like they are now, and you lose all your cryptos, at least you won’t hit rock bottom, and you’ll be able to get back on your feet. 

The second rule states that you should never put all your eggs in one basket. A lot of investors tend to put all their money on just one coin, which can lead to great gains but also exposes them to great losses. A much safer approach is to diversify your portfolio by spreading your investments over multiple digital currencies and other types of assets. Experts also recommend limiting crypto investments to 5% of your total portfolio in order to cushion potential losses. 

Look for Utility, not Hype

The crowd tends to flock wherever the hype tells them to go, but the herd mentality isn’t necessarily the best advisor. Just because a new coin has entered the market and is gaining a lot of attention doesn’t mean it’s a good investment opportunity. While it’s wise to stay up to date with the latest trends and take into account market sentiment, you shouldn’t base your investment decisions on hype alone or on what other people are saying and doing. 

You need to be cautious about crypto hysteria and avoid falling into the FOMO trap. Projects that seem to explode out of the blue promising massive returns, tend to disappear just as quickly. It’s best to research each project thoroughly before making an investment and look for coins that have demonstrated their utility. Cryptos that have real-world use cases can hold their value in time and are, therefore, more reliable. The Dogecoin vs Ethereum comparison offers a good example in this respect.  

Also, Check – A Brief Guide On What Makes Bitcoins So Popular?

Don’t try to Time the Market

Digital currencies are famous for their volatility and dynamic price movements, so it’s almost impossible to predict the price evolution of any given asset. Trying to time a market that’s already highly speculative might help you gain some quick returns in the short term, but it’s certainly not a wise strategy to adopt in the long run – and definitely not a wise move during a crypto winter. A safer and smarter alternative is to focus on long-term investments and build a strategy that can help you reach your objectives in time. 

This crypto winter, just like the ones before it, isn’t going to last forever, but it will leave a lot of damage in its wake. So, if you want to come out of it unscathed, these survival tips can turn you into a more shrewd investor and keep you safe until the storm passes.