Crypto Winter is an extended period of depressed cryptocurrency asset prices compared to previous peaks.
Crypto Winter is the industry term for a long period of decline in the price of cryptocurrencies. Crypto winter usually extends from well-known currencies such as Bitcoin and Ethereum until NFTs as well as coins and crypto tokens lesser known.
This may coincide with another economic downturn or a bear market in the stock market, but this is not always the case. Cryptocurrencies are a relatively new asset class that can move independently from other markets.
As a newer asset, cryptocurrency winter is not as clearly defined as the downturn in other investments. If treated like a stock market bear market, this would be when the price fell more than 20 percent or more from its recent ATH (All Time High).
How to Survive Crypto Winter
Similar to a bear market in the stock market, Crypto Winter can cause widespread losses for investors. Here is some knowledge on how to survive Crypto Winter as an investor.
Investments in Accordance with the Risk Profile
Crypto is still quite new. It is very risky and volatile. Smart investors avoid putting in more than they can afford to lose. It is not wise to invest your life savings in any cryptocurrency.
Do research on the assets to be purchased
Each coin and token is tied to a different managing entity or group of developers. Some have been proven scams.
When it feels like Wild West, it is important to carefully evaluate each crypto project before deciding how much to invest.
Don't be FOMO
WallStreetBets and other online communities are fun places to learn about and discuss investing, but that doesn't mean you have to follow everyone's advice.
Online discussion forums are filled with fans who are not your friends in real life and don't care if you lose assets in the crypto market. Stay focused on your personal goals and your own risk tolerance when investing.
Make Portfolio Adjustments
It may seem logical to add to the value of an asset that has fallen. You don't need to HODL into down crypto if you don't think the price won't come back. It's fine to sell and make portfolio adjustments whenever you see fit.
Conversely, if you believe a cryptocurrency dip is temporary, you may want to buy lower, hoping to buy low and see the value of your portfolio grow as the market recovers.
Also read: How to Buy Crypto on Indodax Easily
If you're in doubt, it's probably best to consult an investment professional in the crypto world who acts as a fiduciary, meaning you have to have your best interests at heart during Crypto Winter, like this year.