The crypto market has seen better days. In the past couple of weeks, the value of most digital coins and tokens has taken a beating. Many new investors have been scared away from the market, fearing that this is just the beginning of a new crash. Are we looking at another crypto winter? Or is this just another correction in an up-and-down market? Read on to find out what you need to know about the current state of the crypto market.
What is a Crypto Bottom?
The crypto market, like any other market, experiences corrections every now and then. A correction is when the value of a particular asset decreases due to a variety of reasons, such as an economic slowdown, an adverse government regulation, or an upcoming change in the technology of a particular asset. The majority of corrections don't last longer than a couple of months and don't result in a crash. When the value of a particular asset falls below its previous low, it's called a "new low," and we're looking at a crash. A crash occurs when the value of an asset or a group of assets decreases by a large percentage, sometimes up to 90% or more, and doesn't recover to its previous value. A crypto bottom happens when the majority of cryptocurrencies have hit their lowest values, and the market starts to recover.
What Should You Do When the Market Goes Down?
There are three things you should do when the market is going down:
- Stay Calm - The crypto market is highly volatile and extremely unpredictable. No one can accurately predict when the market is going to rise or fall. The best thing you can do is stay calm, and don't panic sell. When the market is going down, it's easy to panic, let your emotions take control of you, and sell everything you have. It's important to keep in mind that the crypto market is extremely cyclical, and it has been like this for almost 10 years now. Stay patient, and don't make any rash decisions.
- Take a Step Back - Instead of continuously monitoring the price of your favorite coins, take a step back and analyze the big picture. Try to understand why the market is going down, and try to identify when it will recover. The best way to do this is by following the experts, reading crypto blogs and forums, and joining crypto communities.
- Educate Yourself - The best thing you can do when the market is going down is to educate yourself. Read as much as you can about the crypto market, learn as much as you can about blockchain technology, follow the progress of different projects that are trying to solve real-life problems, and join discussions in crypto communities.
Tips to Survive a Crypto Winter
- HODL - Remember what "HODL" means? Well, it's been almost three years since the term was coined, and the HODL mentality is still relevant. If you want to survive a crypto winter, the best thing you can do is HODL.
- Diversify Your Crypto Investments - One of the most important decisions you'll make as an investor is what tokens or coins you want to put your money in. When you put all your money in one basket, you're playing a risky game. Instead, diversify your investments. Don-t put all your money in Bitcoin (although it will most likely rise again), and don't put all your money in Ripple or Ethereum.
- Participate in ICOs - Participating in Initial Coin Offerings (ICO) is a great way to make some quick cash. ICOs usually take place during a bull run, and they are heavily oversubscribed. Once the market starts going up again, ICOs will be oversubscribed again, and investors will get easy money. ICOs are high-risk, so make sure you do your research before investing in one.
- Read the News - The crypto market is strongly influenced by the government and the media. Bad press can cause the value of crypto to decrease significantly, and favorable government regulation can cause the value of a coin to increase significantly.
When the market goes down, it's easy to get scared, take all your money out, and call it quits. If you want to succeed in the crypto market, you need to be prepared for these kinds of situations. You need to stay calm and take a step back. You need to educate yourself and find out what caused the market to go down and why it's going down. And you need to make sure you're properly diversified. If you do all these things, you'll survive the crypto winter, and when the market goes up again, you'll be positioned for success.
