Shutterstock cover by NaturesMomentsuk It’s been a brutal year for crypto investors. After an extended market rally saw the global cryptocurrency market capitalization top $3 trillion in late 2021, Bitcoin and other digital assets have been battered by macroeconomic turmoil, suffering a decline that’s sent many of last year’s new crypto adopters running for the exit. Today the space is worth just under $1 trillion, with Bitcoin and Ethereum both trading over 70% down from their all-time highs.

But while this year has tested even the most ardent crypto believers, early adopters have become used to extreme volatility in both directions. Crypto has historically boomed roughly every four years as new entrants discover the technology and hype builds, but it’s always suffered from severe crashes after the market euphoria hits a peak. These downturns have become known as “crypto winter” phases, characterized by significant declines in market activity and interest, project washouts, and extreme selloffs. Although few crypto fans welcome bear markets, they can provide an excellent opportunity to recuperate and take stock ahead of the next market cycle. In this feature, we share our top five tips for surviving the ongoing crypto winter. Those who follow them should be well-positioned to thrive once crypto finds momentum. Stick Around Through Crypto Winter

While crypto winter can be challenging, it’s important to remember that bear markets are actually where many people build true wealth. This is especially true in crypto for two reasons.

One, projects that lack fundamentals, product-market fit, or are outright scams, get washed out during bear markets. At the same time, the space turns its focus from price action, marketing, and hype to product and business development. Some of the leading crypto projects today, such as Solana, Cosmos, and Uniswap, were built and launched during bear markets. Ethereum, the world’s second-largest cryptocurrency, launched in the middle of the Bitcoin bear market in 2015 and traded below $10 until the 2017 bull cycle. Ethereum peaked at $1,430 at the tail end of that cycle in January 2018, yielding staggering returns for early investors.

This leads to the second reason why sticking around is key for surviving the crypto winter and thriving during the next cycle. Many legitimate cryptocurrencies get mistakenly labeled as Ponzi schemes when they are “greater fool” assets. In finance, the greater fool theory suggests that investors can sometimes make money on “overvalued” assets by selling them to someone (the “fool”) for a higher price later. Exacerbated by herd mentality, this psychological phenomenon leads to economic bubbles followed by massive corrections. And while all markets are subject to this, crypto assets are especially prone, further highlighting the importance of being early.

And being early in crypto means staying engaged, learning, and analyzing the market when the industry is in a bear cycle . Some of the most successful investors in the 2017 bull run were those who endured the 2014 through 2016 bear market. Similarly, many of those who made a killing in 2021 stuck through the grueling 2018 through 2019 downturn. Above all else, sticking around is the most decisive factor for success when the market turns around. Rethink Your Thesis

Losing money is never fun, but it can be a great teacher. Crypto winter is an excellent opportunity for investors to re-evaluate their investment thesis, reflect on any mistakes they made over the last cycle, and prepare for the next leg up.

An asset or an entire asset class plunging 70% from its all-time highs could mean different things. For example, a significant drawdown in an investor’s portfolio could mean that the market has invalidated their investment thesis, meaning they need to rethink their approach and reconstruct their portfolio to reflect the new reality better. If this is the case, selling at a loss and making different investments could be warranted.

However, a significant drawdown doesn’t necessarily mean that an investor’s investment thesis has been invalidated. Instead, it could be an excellent opportunity to double down. For example, if a token’s fundamentals improve, investors who liked it at $1,000 should like it even more at $200. A drop in an asset’s price doesn’t necessarily imply it has become a weaker investment. There are numerous reasons an asset could temporarily decline despite strengthening fundamentals, many of which are exogenous or unrelated. An investor’s job is to identify precisely these market inefficiencies, buy temporarily undervalued assets, and then sell them at a higher price when the markets have caught up. Employ Second-Order Thinking

Every crypto bull cycle is triggered […]

source Crypto Winter Is Rough. Here Are Five Essential Survival Tips

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