UNSTABLE. Coins, Companies, Confidence.
What can we learn from this crash?
There is a general fear of investing in both traditional stock and crypto markets today. Beyond inflation and increased interest rates, there are a host of issues contributing to this crash in crypto particularly. Some of these include:
- The collapse of UST– where millions of holders watched their portfolios plummet due to a depegged stable coin
- Crypto lending platform Celsius– facing solvency issues and halting account activity
- Coinbase hiring pause and layoffs announced by Gemini and Crypto.com
All of these events have issued a hard blow to the crypto community and many in the market are reacting with panic leading to capitulation. But it’s not enough to be reactive in this space. Let’s take a look at proactive ways to minimize risk in a bear market.
“This is the very beginning of a global economic shift. Know that you are here for the long haul.”
Do your research! One could argue that all cryptocurrencies are speculative, but none are more risky than those with no use case. Choose solid crypto projects with clear purpose and direction. This includes NFTs. Many of them have a value for their collectability, but look for NFTs with valued functionality as well. Remember that even stable coins have their own inherent risks. Therefore, when building your portfolio, it’s wise to diversify your holdings to better protect yourself.
Some of the most reputable cryptocurrency platforms have been responding questionably to this economic downturn. It is vital to control and custody your own crypto. Many companies will focus on self preservation first and that means your assets may not be available to you when you want them. Hardware wallets are your best choice, but a non-custodial wallet beats leaving your assets on an exchange.
Unless you’re an experienced trader, don’t enter this market with sporadic short-term goals. This is the very beginning of a global economic shift. Know that you are here for the long haul. We’ve yet to explore all the life-changing ways blockchain technology will revolutionize the world. Don’t see this bear market as a sign that you should exit crypto. And whatever you do, don’t make decisions based on fear. Feelings change, as do markets.
Some investors view bear markets as an opportunity to increase their long-term holdings. Many others wait for the trend to reverse. One thing that history has proven is markets rise and fall, but there are great gains to be had during both.