Crypto winter — the cryptocurrency equivalent of a bear market on Wall Street — has arrived.
While financial experts have a specific benchmark to define a bear market, which means that stocks have dipped by 20% from their highest value, the definition of a crypto winter is not as specific. Generally, if prices drop and remain low for an extended period, investors and experts will declare a crypto winter. And, indeed, that time is here.
The dip in the market has been accompanied by lay-offs at some of the major crypto exchanges, including Gemini. Coinbase, for its part, said it would be examining its headcount and is currently in a hiring freeze.
You may not be surprised to learn that the term crypto winter is believed to come from a popular meme and phrase from a TV show. In “Game of Thrones,” the House of Stark would declare, “Winter is coming,” as a warning of prolonged conflict and hard times ahead.
Also not surprisingly, the online community of crypto investors has gathered to share their best tips for surviving the crypto winter on their preferred social media platforms.
Use Dollar-Cost Averaging to Reduce Your Risk
NFT collector @Krissyos, on Twitter, offered tips for crypto and NFT investors in a 24-part thread. The first tip was to use dollar-cost-averaging (DCA) to restrict “your potential upside to mitigate possible losses.” By spacing out your investments, you don’t have to guess at finding the “dip” in your favorite crypto. “Look at your risk tolerance, then set up automatic triggers in your desired exchange accordingly,” @Kissyos tweeted.
Bobby Ong, co-founder of CoinGecko.com, agreed, “During bear markets, it’s very hard to time the pico bottom. If you don’t have any crypto exposure, start with BTC/ETH and dollar-cost your way in.”
Steer Clear of the Most Volatile Investments
“Once a widespread market downturn commences, the first step to take is to reevaluate current positions and reduce exposure to the most volatile assets,” CoinTelegraph.com advised.
Examine your crypto portfolio and look for projects that don’t seem to have staying power. These investments — from smaller alt-coins to NFTs — may not survive the winter. It’s not too late to cut your losses and minimize risk now.
Don’t Risk More Than You Can Afford to Lose
The old adage of never risking more than you can afford to lose holds more relevance than ever in a down market. Krissyos eloquently tweeted, “If you can’t sleep at night feeling safe with your current store of value, you won’t be able to make rational decisions.”
Invest in Yourself
If you find your best course of action is to hold tight until winter turns to spring, take this time to invest in learning more about crypto and NFT investing, experts say. Ong said he will use this time to find new projects that show promise. He tweeted, “If you are a long-term BTC/ETH holder, multi-year market gyrations won’t make any difference, so go spend quality time on yourself, family, and friends. Go for a jog, cycle, hike. Improve yourself technically and socially.”
4/ During bear markets, it’s very hard to time the pico bottom. If you don’t have any crypto exposure, start with BTC/ETH and dollar-cost your way in. If you already have some crypto exposure, focus on quality projects to find where fundamentals have been way oversold to DCA in.
— Bobby Ong (@bobbyong) June 12, 2022
If you’ve done your research and signs point to an NFT or cryptocurrency doing extremely well in the long term, don’t be afraid to double down on your favorite investments, Fidelity Investments CEO Abigail Johnson said at the Consensus 2022 event in Austin, as reported by Forbes.com. “This is my third crypto winter. There’s been plenty of ups and downs, but I see that as an opportunity.”