A crypto winter or bear market means that the market is experiencing a prolonged decline. There is at least a 20% decline from the top accompanied by a pessimistic market view for traders and investors. A crypto winter is often accompanied by rising uncertainties along with high volatility. Investors are unsure of the future, combined with losses racked up and no directions on sustainable ways to maintain their profiles. This will ultimately snowball leading to a higher spike on the left end of Fear & Greed Index.
Current Market Conditions
Compared to the crypto winter in 2018, this winter is significantly more challenging. For starters, the downturn of the market is huge and ongoing. All 100 of the largest 100 cryptocurrencies are worth less than they were last year. The drop of value in crypto was very steep. Comparing the charts of total market cap between 2021 and 2022, their difference in total market cap was more than 60%!
How Long Will This Crypto Winter Last?
Unfortunately, there are no definitive answers to this question. Crypto Winter can last for months, years even. Earlier this year we saw the downfall of Terra and from that point on, it has been a spiraling situation. The trading volume for cryptocurrency is lower than ever seen and people are very sensitive to slight fluctuations of the market. We are also witnessing the struggles of many financial firms, reaching or declaring bankruptcy with whereabouts currently unknown.
Over on the fear and greed index, Extreme Fear has persisted for quite awhile. We are seeing a lack of investor confidence towards the market with an unfavorable macroeconomics view. In all honesty, all of these issues are interrelated. As trading graphs took a downturn for the dip, most suffers losses. Investments pulled out, resulting in a lower trading volume. Low trading volume reflects badly on the charts leading to lesser confidence on the market and resulting in bad macroeconomics. So what can we do to keep ourselves in the loop during this winter?
What Strategies to Implement during Crypto Winter?
1. Heavy Research and Learning
It sounds dumb to state the obvious, but I must emphasize on the importance of proper research. Crypto winter is the perfect time for you to stack up on knowledge. It is the perfect opportunity for you to learn crypto at a slower pace in preparation of a potential bull run. Current market status will tone down your fear of missing out, allowing you to focus on what is important. Brush up on your knowledge of cryptocurrency and all there is to know here at MEXC. It is also beneficial for you to get up to date with industry news as they might be the one to show sights of a potential bull run.
2. Get familiar with Dollar-Cost Averaging (DCA)
Dollar-cost averaging is an investing technique that seeks to soften the impact of volatility on asset purchases. In the long run, dollar-cost average have the potential to outperform timed trading. Instead of timing the bottom for a better price, you purchase an asset at regular intervals for a fixed amount of funds. Doing so lowers out your average buying cost and potentially place you in a favorable spot.
3. Try To Dabble in Staking Options
Staking is a strategy whereby you stake your coins for the long term and gain profits. It is a low risk, easy strategy that helps to bolster your portfolio. When you lock your coins without pulling out, you gain profits. If your pile of coins grow, you gain profit as well. In a way, it is a steady and constant profit with lesser headaches for you. Staking your coins also reduce your need to constantly check on the markets. It can help prevent you from making rash decisions and generating the fear of missing out. In case you are wondering, yes MEXC does provide a platform for you to stake your coins. Check out what we have right now!
4. Diversify Your Crypto Portfolio
You have heard the saying, never place all your eggs in the same basket. The concept works the same for cryptocurrency. We will never know when does the market recover or who will perform better down the road. It is best to spread your resources towards a few different coins. Diversify your choices by looking into new projects or coins with a good track records. In a sense, you are basically reducing your trading size in return for lower risks. Diversity is strength. Currently, MEXC has more than 2,000 coins waiting for you to explore. However, I want to remind everyone to conduct proper research before investing as risks will always be present.
Word of Advise on the Current Crypto Winter
At downtimes like this, we are sometimes prompted to make irrational decisions. Anxiousness to make a profit might result in more lost if we are not careful. It is always best for us to exercise a fair amount of cautious in any type of market. We should also learn to exercise strict discipline. Not gaining huge profits is fine, a small win is still a win. Bottomline is, panicking during crypto winter will do you no good. The best way to handle it is to avoid panic selling, analyze the market and try to implement some strategies. Make sure that your risk is low and we shall all hope for a better turn.
Last but not least, MEXC will always welcome you with open arms. Start trading with us today. You can also read more articles dedicated to help you in your quest for knowledge and get up to date with all industry news. Have fun and trade safe!