The crypto winter is here, and only the strong will survive the avalanche of volatility, layoffs, and bankruptcies that’ll affect the cryptocurrency industry.
Those interested in investing in digital assets want to ensure the companies they collaborate with have undergone due diligence and proper licensing. Investors want to know the assets they buy, sell, or loan won’t be lost in the bear market. Traders and investors demand assurances from crypto developers.
Yes, the crypto winter won’t last forever, but at the moment, the market is in a place it has never been before, and investors cannot stop but wonder what the future brings. Over the year’s first half of the year, the price of all digital currencies dropped, and several investors and crypto-related organizations have dealt with severe financial difficulties.
Crypto specialists call this period a crypto winter or bear market, characterized by sustained low prices. There have been some challenging months for crypto enthusiasts, and the market still needs some time to bounce back. From Bitcoin to Ethereum, all well-performing digital assets are struggling to stay afloat and remain safe investments.
If you want to join the crypto market during the bear market, it’s wise to research to understand what it implies.
What is a crypto winter?
Crypto specialists use the term crypto winter to refer to the market in the bear phase. However, it’s a difference between the crypto winter and the bear market. A bear market is a market that registers drops in asset value, but a crypto winter is a phase when the market goes sideways and doesn’t do anything to recover.
Crypto experts reveal that traders have flat returns during crypto winters and negative returns during bear markets. The crypto market has bounced back over the last few weeks, so several investors registered the least substandard or flat returns on their investments.
The drawback of a crypto winter is that it causes disinterest in the market because investors don’t get the expected profit.
This year’s bear market is different from the previous ones
Crypto specialists generally agree the market has entered a crypto winter, and traders should get accustomed to registering negative or flat growth. The reason traders feel this crypto winter is more severe than the previous one is that there are more investors in the sector than last time, so more people experience the effects, and it causes more noise in the industry. The more people talk about the issue, the more severe it looks.
Also, numerous people entered the market when BTC coin price and other assets’ values were high, and they didn’t expect it to go sideways and lose their investment. In addition, many of them lack experience and education in the industry and are surprised to find out that cryptocurrencies behave differently than stocks and other assets when they deal with high inflation and growing interest rates.
Over the years, specialists promoted Bitcoin as an inflation hedge because it has a speculative nature and a limited supply of 21 million coins. Now people are getting upset because it lost some of its value in the present market conditions. However, in many ways, the bear market and crypto winter are similar to the housing crisis in 2008 and 2009.
It was unrealistic to think that some properties would maintain (or increase) their values, as it’s now to think some cryptocurrencies won’t be affected by the market conditions. And let’s not forget that several hacks on exchanges and firm collapses also rocked the industry to its core.
How investors can survive this crypto winter
Here are some salient tips that would come in handy for serious investors that are looking out for ways to comfortably navigate this year’s bear market.
Don’t engage in spot trading
Crypto experts believe that the sell-off trend and increased market volatility will continue, so it’s wise to avoid spot trading over the following months. Even some Bitcoin miners decided to sell their holdings due to the present market conditions because no one can argue that market volatility will impact the industry for some time.
However, this is the ideal moment to explore crypto projects like crypto SIPs or fixed deposits. If you’re a retail investor, it’s best to avoid spot trading because it might not be profitable.
Research, research, and research
It’s paramount to re-evaluate your trading strategies to identify new investing opportunities. The best way to do this is to continually research for new opportunities, so you can take advantage of opportunities when the market bounces back.
Read more about crypto projects and learn what utilities different coins have, so you can make informed decisions. This is the worst moment for impulse buying, so develop an investing plan and stick to it.
Don’t invest more than you can afford to lose
You should follow this piece of advice during both bull and bear markets because digital currencies are high-risk, high-demand assets, and you can easily lose all your funds if you don’t interpret the signals correctly or use the wrong strategy. Use only your disposable income, and don’t skip any step before placing a trade. Just like any other investment, crypto trading also requires your attention and patience.
Crypto winters are normal cycles in the digital assets market, and you shouldn’t fear them because the market will most likely bounce back, as it always does. Yes, you’re trading in a bear market, but the phenomenon isn’t as dramatic as some people claim. This phase was expected with new regulations and the increasing adoption of cryptocurrencies.
Don’t lose sight of your objectives
You set a list of goals when you entered the crypto market, and you shouldn’t lose sight of them only because the market isn’t performing as well as it did. Yes, bear markets and crypto winters can be stressful for all investors (seasoned and beginners).
But it’s essential to keep in mind that the crypto market is still young and volatile periods come and go. The sector is mainly driven by its online community, and with the buzz surrounding the subject, it’ll most likely bounce back. However, while navigating the current period, it’s best to exercise patience and do your
