The recent crypto market crash is undoubtedly scary for first-time traders. The majority of crypto holders are likely looking at a portfolio that has lost 50% of its value since last year. The majority of people are likely caught in a dilemma between accepting these huge losses, and holding their assets, but risking further depreciation of their assets.
Market crashes are a natural part of crypto trading, and they should be treated as a recurring occurrence. The silver lining here is that because these dips are an inherent risk, there are many ways to survive a dip. The dichotomy of choosing between accepting huge losses and risking a further dip is a poor mindset. There are many other options to take during a bear market.
Adopt the Right Mindset
The first thing to understand is that the depreciation of your assets is not permanent, just as is their appreciation in value. This entails that this is merely a phase that you might have to endure for a few months to several years.
Sometimes, survival means adopting a frugal lifestyle temporarily. Reducing expenses and leveraging other sources of income are a few ways to weather the storm. Always remember that crypto is volatile, you should never solely rely on crypto gains to fund your lifestyle.
Avoid “Buying the Dip”
Even when it’s tempting to buy more crypto during a dip, it’s important to keep in mind that by doing so, you’d be taking on more risk as nobody knows how long bear markets last. Though buying an asset while it is low will net you significant gains, it’s important to be watchful of signs of reversal as well as confirmation that the asset is indeed going to go on an uptrend.
It’s equally important that you only purchase from reputable sources such as https://netcoins.ca/buy-xrp/ to further limit your risk.
Take Advantage of Short Rallies
Even during bear markets, coins will still occasionally go on short pumps. This is usually caused by an increase in demand for the coin, which in turn creates a small increase in value, only to reverse later when traders sell their coins when it hits a certain value. The best part about taking advantage of short rallies is that you can more or less determine the resistance levels through the technical analysis of historical data.
This means that you can simply use low lows as your point of entry, and short rallies as your take profit. While this may not seem like it yields gains, they will accumulate into a significant amount if you commit to it.
The last thing that you can do during a bear market is to do nothing. Take a break from trading while you wait for a better time to resume trading. If you lose sleep over the depreciation of your portfolio, you might as well take a break from all of it as your mental health is just as important as your portfolio. This way, you avoid making any rash decisions that you might end up regretting later on.