The cryptocurrency market has an attention-grabbing method of catching even probably the most seasoned veterans off guard as every bull and bear market initially exhibits similarities to earlier cycles solely to veer off in an sudden path and wipe out the fortunes of newly minted crypto millionaires.
This was the case with the weak shut of 2021 which utterly went towards the bullish $100,000 BTC value estimates that crypto analysts and influencers have been peddling nonstop.
Currently, Bitcoin value is greater than 50% away from its $69,000 all-time excessive and altcoins have fared worse, with many down greater than 60% within the final 2 months. In instances like these, merchants have to regroup and re-evaluate their funding technique, moderately than simply shopping for each value dip.
Here are 5 methods merchants can use to outlive an sudden crypto winter and retain as a lot worth in a single’s portfolio as doable.
Reduce publicity to extremely unstable altcoins
Once a widespread market downturn commences, step one to take is to reevaluate present positions and scale back publicity to probably the most unstable property.
Oftentimes these are new tasks which have come out of the trending sectors of the crypto market reminiscent of meme cash, NFTs or rebase tasks like Wonderland (TIME), as a result of most of the token holders are new to the group and never long run investor just like the person bases for extra established tasks.
$TIME to pack it up. pic.twitter.com/hJI3jB6eU0
— humble defi farmer (@PaikCapital) January 25, 2022
A great way to start the analysis course of is by a venture’s GitHub account to see the extent of exercise and the variety of builders devoted to constructing out the protocol.
If there’s hardly any growth regardless of flashy advertising and marketing gimmicks and large guarantees, the venture could also be one an investor ought to minimize when the market begins to lose momentum.
Traders may then put these funds in stablecoins that may be staked to earn yield or purchase future market dips.
Dollar-cost averaging (DCA) is the method of shopping for an asset in tranches over time to common out the worth paid and account for volatility-induced modifications in value.
There’s a purpose that bitcoiners have probably the most aggressive dollar-cost-averaging group.
They appropriately establish work and true shortage, and perceive it. It’s exhausting to rival that power and utility of one thing that *cannot* be elevated in provide.
— Lyn Alden (@LynAldenContact) January 31, 2022
While DCA technique is an effective option to enhance publicity to basically sound tasks over time, it’s normally greatest to attend till after the mud has settled considerably and a interval of consolidation has commenced.
The focus of dollar-cost averaging needs to be on tasks which have lively growth, engaged communities and a roadmap that lays out how the venture will proceed to develop and stay viable sooner or later.
Staking is probably the best option to enhance the worth of a portfolio long-term and it removes the strain of obsessing over every day value fluctuations for the reason that staked asset is constant to accrue tokens.
Most layer-one protocols provide the power to stake their native token on the community to earn a yield, together with Solana, Cardano, Polygon and Avalanche.
⚡️Top Projects by Total Staked Value
25 January 2022$SOL $ADA $ETH $LUNA $AVAX $DOT $BNB $ATOM $ICP $NEAR $MATIC $FTM $XTZ $ALGO $CAKE pic.twitter.com/X9IgsonWKr
— CryptoDep (@Crypto_Dep) January 25, 2022
Ether holders can even stake their tokens on the beacon chain for Eth2, nevertheless it’s necessary to notice that staking rewards will be unable to be claimed till Eth2 is totally launched.
There are many different staking choices on the market from gaming protocols like Axie Infinity and Illuvium to NFT marketplaces like LooksRare, so as soon as a deep dive has been made and basically sound tasks are chosen, staking turns into a matter of setting it and forgetting it.
Find tasks with rising ecosystems and perks
Projects that assist token holders earn through staking, liquid staking, borrowing and airdrops are additionally value contemplating when the market turns bearish.
Staking is the best type of this because the variety of tokens will increase over time, however different choices embody token launchpads, NFT marketplaces and protocols recognized for providing airdrops to group members.
One instance of a protocol the place early adopters are being rewarded is the Cosmos (ATOM) community and its rising group of tasks linked through the Interblockchain Communication Protocol (IBC).
Best website to maintain monitor of @Cosmos Airdrops https://t.co/XzOOIb5TAG
Builders: submit your upcoming airdrop on that website if you wish to enhance consciousness.@CosmosUplink pic.twitter.com/IPoDqZ8ymp
— Cryptocito | YouTuber ⚛️ (@Cryptocito) January 26, 2022
ATOM stakers and those that have engaged with the Osmosis (OSMO) decentralized alternate have been rewarded with a protracted record of airdrops from tasks launching throughout the ecosystem as a method to assist bootstrap exercise inside their communities.
Invest in your self
One of probably the most personally helpful issues an investor can do throughout a down market is to spend money on themselves by studying one thing new.
Not solely will this assist buyers to keep away from the urge to promote and miss out on future positive factors, however it may additionally result in new avenues to construct wealth.
Level up and spend money on your self:
– learn extra books
– work out effectively extra usually
– spend time with household and buddies
– take a course and study a brand new ability
– spend money on a interest to share w/others
You get out of life what you place into it.
Find your values and spend money on them.
— Wealthy Tree (@WealthyTree) February 1, 2022
Despite the market downturn, cryptocurrencies proceed to advance alongside the trail to mass adoption and the variety of jobs within the blockchain sector is just going to extend transferring ahead.
Whether it’s studying to program in Solidity, experimenting with graphic and digital design to create a brand new line of NFTs or simply doing analysis to achieve a deeper understanding of the assorted sectors of the market.
Ultimately, the important thing to surviving a bear market is staying constructive and being affected person.
Want extra details about buying and selling and investing in crypto markets?
The views and opinions expressed listed here are solely these of the creator and don’t essentially replicate the views of Cointelegraph.com. Every funding and buying and selling transfer entails threat, it is best to conduct your personal analysis when making a choice.