Crypto winter is coming! How to manage your assets during the cryptocurrency bear market

Crypto winter — the crypto equivalent of a Wall Street bear market — has arrived.

While financial experts have a specific benchmark to define a bear market, meaning stocks fall 20% from their highest prices, the definition of crypto winter is not so specific. Generally speaking, if prices fall and stay low for a long period of time, investors and experts will declare a crypto winter. And, indeed, that time has arrived.

The market decline was accompanied by layoffs at some major cryptocurrency exchanges, including Gemini. Coinbase, for its part, said it would review its headcount and was currently instituting a hiring freeze.

You may not be surprised to learn that the term crypto winter is thought to come from popular memes and phrases from the TV show. In Game of Thrones, the Starks would declare, “Winter is coming,” as a warning of long conflicts and hard times ahead.

It’s also no surprise that online communities of crypto investors have come together 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 offered tips for crypto and NFT investors in a 24-part thread on Twitter. The first tip is to use dollar-cost averaging (DCA) to limit “your potential upside to mitigate possible losses.” By diversifying your investments, you don’t have to guess at finding the “downside” in your favorite cryptocurrencies. “Take a look at your risk tolerance and set up auto-triggers accordingly on your desired exchanges,” @Kissyos tweeted.

Bobby Ong, co-founder of CoinGecko.com, agreed: “ During a bear market, it is difficult to time a pico bottom. If you don’t have any crypto exposure, start with BTC/ETH and USD cost. ”

Avoid the most volatile investments

CoinTelegraph.com advises: “Once a general market downturn begins, the first step is to re-evaluate current positions and reduce exposure to the most volatile assets.”

Check your crypto portfolio and look for projects that don’t seem to have staying power. These investments — from smaller altcoins to NFTs — may not survive the winter. It’s not too late to cut your losses and minimize your risk.

Don't risk more than you can afford to lose

The old adage of never risking more than you can afford to lose is more relevant than ever in a down market. Krissyos eloquently tweeted: “If you can’t feel secure in your current store of value at night, you can’t make rational decisions.”

Invest in yourself

If you find that the best course of action is to hold out through the winter into spring, take the time to invest in learning more about crypto and NFT investing. Ong said he will use this time to look for promising new projects. He tweeted: "If you are a long-term holder of BTC/ETH, years of market volatility will have no impact, so spend quality time with yourself, family and friends. Go jogging, biking, hiking. Improve yourself in technology and socializing."

Consider doubling down

If you’ve done your research and there are signs that NFTs or cryptocurrencies are going to do very 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, according to Forbes.com. “ This is my third crypto winter. There have been a lot of ups and downs, but I see this as an opportunity. ”