The question of how long the crypto winter will last concerns both current holders of digital assets and those who are just about to buy them today. Experts do not yet have an unequivocal answer, but there are prevailing convincing opinions.
What is crypto winter?
Crypto winter is a period of a long decline in the cryptocurrency market as a whole, a decrease in user interest in digital assets and even blockchain technologies. This period is also known as the bear market.
It is believed that in the history of cryptocurrencies there has already been more than one crypto winter – the previous one lasted from 2018 to early 2020. Now we are witnessing the crypto winter 2022: bitcoin has fallen by 70%, the rest of the coins perform no better. But why is this happening? Why can’t it be summer all the time?
Causes of the Crypto Winter
When something goes wrong, you want to know who messed up. But the blame for the start of the bear market is collective. The reason for the onset of the crypto winter in 2022, like any crisis in the financial markets, is one – the reluctance of its participants and new investors to take risks.
The policy of central banks, pressure from government agencies, the collapse of the UST stablecoin and the Luna token of the Terra project, as well as other projects related to the crypto industry, contributed to such a downtrend. As a result, demand for defensive assets and commodities, cash is growing, while interest in high-risk investments remains at a fairly low level.
This state of the crypto market makes investors nervous who have invested in seemingly promising projects, and now they are watching their portfolio depreciate with each passing day. How can they survive this winter with the least loss?
5 Tips for Surviving Crypto Winter
Tip #1: Don’t Invest More Than You Can Afford To Lose
Crypto is still a fairly new asset. Moreover, it is extremely risky and unstable. Even long-standing and reliable coins can crash in no time. Therefore, it is unwise to invest all your savings in any cryptocurrency.
Tip #2: Carefully Evaluate Each Crypto Project
A token cannot exist on its own, since, as a rule, there is a managing organization or community behind it. Some of them turned out to be scammers. Therefore, it is recommended to carefully study what and who is behind the crypto project. For example, check out the roadmap and official community groups on Twitter or Reddit.
Tip #3: Watch Out For The Herd Mentality
Online communities are fun places to learn about and discuss investing, but that doesn’t mean you should follow everyone’s advice. For example, if someone knows how to send people into space, this does not mean that he is good at cryptocurrencies (if you know what I mean). As a result, it may happen that he remains just as shamelessly rich, and you, following his advice and succumbing to the general euphoria, will be left with nothing. But, and if you have already filled your portfolio with mem-coins, unable to resist the influence, you can always swap part of your doge to btc, or another coin.
Tip #4: Monitor the Market Situation
This is especially true for coins that are in your portfolio and those that you want to purchase. If, say, it is Theta coin: study its price charts, trading volume, market cap, etc. If, say, it is Theta coin: study its price charts, trading volume, market cap, Theta Price Prediction, etc.
Tip #5: Make Portfolio Adjustments
There is no need to hope for a cryptocurrency that has failed if you don’t think it will ever recover. It’s okay to sell and make adjustments to your portfolio whenever you see fit.
Finally, keep positive, because even after the most severe frosts, a thaw comes.