Cryptocurrencies have had a rough year, with the overall market capitalization dropping by more than 65%. For those who invested in bitcoin and other cryptocurrencies near the top of the market, this has resulted in significant losses.
While many are tempted to sell their positions and cut their losses, others see this as an opportunity to buy more coins at a discount. Dollar Cost Averaging into your existing positions is a proven and effective strategy for times like these. So
What else should you do with your crypto holdings during a bear market?
Here are six tips that will help you stay on top of your portfolio
- Don’t panic sell – remember that you’re in it for the long haul. Trading based on emotion never leads to a good result. It is a gamble at that point, there is no strategy to it. If you happen to be right this time, you may be wrong the next 10. It is a weak mindset and bad habit to fall into. You should not enter a position without a working strategy. A good strategy has an exit plan. Stick to your exit plan.
- Don’t invest more money than you’re willing to lose. Crypto is a new technology. Very new in the grand scheme of things. Decentralization is a powerful tool that will change world, but it will take a long time to do so. There will be wild swings up and down while the market adjusts to this new technology. Many projects that were shilled will go bust. Many are ponzis. It is a wild-west style environment out there, and it is on the you, the investor, to perform proper due diligence and pick the projects you think will make it into the next decade.
- Keep your coins safe by using a hardware wallet or cold storage. This can’t be stressed enough. No keys – no ownership. If you are trusting an exchange to hold your coins, you are making an error in judgement. There’s a reason there is a whale movement index, that tracks the movement of coins from large wallets to exchanges. When the whales buy coins, they immediately move them to cold storage.
- HODL – don’t give up on your crypto just because the market is down. HODL is not just a dumb play on words. It stands for hold on for deal life. While many coins have faded into obscurity in the past, simply holding and forgetting about bitcoin, eth, binance, and ripple would have yielded you returns greater than just about any asset on the planet. Accept that there will be days with blood in the streets and people screaming for the end of the crypto market. And there will also be the opposite: people calling for bitcoin to 200k. tune out the noise and stick to your strategy.
- Try to find new use cases for your coins that will increase their value. Staking is a great way to earn a return on your holdings. It can be used as a dollar-cost-average strategy. Whether the coin price drops or increases, you are making a return on your holdings. Some coins offer some very serious returns that can make a huge difference when things do make a turn for the better.
- Stay informed about what’s going on in the crypto world so you can make sound decisions. Keep your finger on the pulse. Things can change quickly. Look at bitcoin’s parabolic rise in 2020. Many people sat on the side lines and watched it run from 12k to 40k, thinking they will just buy it when it comes back down. This will likely cause a fomo (fear of missing out) entry, which bring us back to point 1 – create your strategy and stick to it.
Although we hope that the market will rebound soon, in the meantime, there are still things you can do to protect your investments and even make some money. Check out our website for more best-practices on how to manage your crypto holdings during a bear market – we have articles on everything from diversifying your portfolio to hodling strategies. Stay safe and stay strong – the bull market will return!