We Are in a Crypto Winter. Here's How to Survive
Fans of the hit TV show Game of Thrones will be well aware of one of the most iconic lines from the series, 'winter is coming'. This phrase was deployed to illustrate oncoming horrors from marauding herds of white walkers (if you didn't watch the show, they're like zombies) who existed solely to bring chaos upon the living.
In the current crypto market, which has seen a period of sustained volatility, another phrase from Game of Thrones is more appropriate - 'the night is long and full of terrors'. Investors of all creeds look nervously at their assets, unsure of what awaits around the next corner, scared that their assets may again face a slaughter, and wondering when this crypto winter will end.
In many stories (Game of Thrones included), good overcomes evil resulting in a happy ending. Whilst we are amid the bleakest crypto winter on record, there is reason to believe better times will come again. You can take steps to slow the winter blues, and this article will provide some pointers on how to shut out the cold best.
What Is A Crypto Winter?
Let's start by defining a crypto winter and what can be expected during this rather bleak period. Winter time drums up thoughts of cold weather and harsh conditions over a prolonged timescale, a description that draws parallels to the definition of a bear market.
Simply put, this period is a negative sentiment amongst investors and the market, where the value of crypto assets and stocks recede at an alarming rate. High economic inflation is sometimes a feature of a crypto winter too.
With inherent negativity throughout large swathes of the market, double-digit crypto value depreciation is more likely to occur. For instance, the current crypto winter is the most notable to date, with a nearly 60% drop in the value of crypto markets. Combined crypto holdings were previously valued at approximately $3 trillion and now sit closer to $1 trillion.
There is no predefined marker or decrease in percentage to signify the beginning of crypto winter. The consensus is that a considerable and sustained downturn in the market is the critical indicator that winter has begun.
How To Survive The Crypto Winter
There's little doubt this is the most challenging era for crypto, a time when prospects and market prosperity look slim. Many have taken this opportunity to cash in on their assets as safety protection against further descent. Despite all the doom and gloom, navigating these challenging times is possible.
Taking a measured, strategic approach to the market decline could be the most effective medium in seeing through the crypto winter. Below are a few examples of how you can weather the storm.
1. Understand that Dips Are Normal
Wouldn't it be wonderful if whatever crypto you invested in remained on a permanent, positive trajectory? If that were the reality, everyone would be investing each cent they had!
Markets do not operate in this fashion. Each moment of every day, the value of crypto tokens fluctuates, sometimes positively, at other times negatively. This is part and parcel of investing. Furthermore, investing in a burgeoning market such as cryptocurrencies can be unpredictable and risky, a fact all investors should be aware of before purchasing any cryptocurrency.
Right now, there is a sizeable and prolonged period of volatility, but panicking about your assets does not improve your prospects. Stay level-headed, be aware of the risks of investing, and never invest more than you can afford to lose.
2. Choose Carefully Where You Invest
With thousands of tokens, projects, and platforms all vying for your attention, you have a seemingly unlimited number of avenues to grow your portfolio. For example, investors may invest in an altcoin or meme coins that have gained momentum rapidly. Others may want to purchase an NFT for much the same reasons.
Both these groups share a common denominator - to invest at a low price point with the hope of making a quick buck. Safe to say such a strategy is less than watertight. Being lured in by swanky marketing or novelties can be an easy mistake, and whilst every altcoin isn't necessarily going to fail, longer-term, established cryptocurrencies can be a more stable investment choice.
Before making any investments, it is advisable to research, evaluate and identify the most viable investment options, then make your move. Checking out a crypto aggregator such as CoinGecko is a good starting point and will help you determine the best investment options currently available.
3. The Dollar-Cost Averaging Strategy
Dollar-Cost Averaging (DCA) investing strategy hinges on the continued process of buying a particular asset at predefined intervals as a means of averaging out the cost paid over time which combats market volatility. Investing in established, growing and viable projects and providing more exposure to the asset can prove most fruitful to maximise the benefits reaped from the DCA strategy.
4. Investing With A Benefit Orientated Platform
To maximize the productivity of your idle crypto assets, you can choose to invest your digital assets with a crypto interest earning platform. Platforms such as Hodlnaut permit investors to deposit their chosen asset (including BTC, ETH, USDT, DAI, WBTC, and PAXG) into their Hodlnaut Interest Account, which immediately begins accumulating interest with market-leading interest rates. Users receive interest payments every Monday at 5 P.M. (GMT +8). By putting your digital assets to work, you're guaranteed to make a return on your investment, even during this challenging crypto winter.
Winter is the most demanding of seasons, with short days, dark and cold weather, and the warmth of summer feeling far off. However, seasons change, meaning better conditions are never far off. The same can be said of the crypto market and the current crypto winter we are all exposed to. A glance at the market history highlights that recovery is possible even after the most trying times.
That said, when cryptocurrencies scaled new heights in 2017, before a descent into the last crypto winter stretching from 2017 to 2020, Bitcoin recovered impressively, reaching an all-time high of $65,000 in February 2021. We can but hope for a similar healing process this time around.
The crypto winter may not have even peaked, but now is the time to hold firm and believe in the market, as mass adoption of crypto and blockchain technologies will play an influential role in our economic futures.
If you’re interested in earning interest on your crypto assets while hodling through this crypto winter, sign up for a Hodlnaut Interest Account here.