However, just because the last two crypto winters lasted three years is no guarantee that this one will. Nevertheless, it does give us an idea that, historically speaking, crypto winters can easily last for a year more.
The Advantages of Crypto Winter
Investors look at crypto winter much like they would any bear market in other asset classes. The longer the crypto winter goes on, the younger companies and start-ups will be weeded out.
At the same time, more stable, mature companies will have more time to prove and improve their offerings.
With low crypto prices, it’s also a good time for investors to buy the dip. With the hopes that when the crypto winter ends, they will experience the same explosive growth we’ve seen in the past.
The Disadvantages of Crypto Winter
Crypto winter’s disadvantages are similar to a bear market. Trillions of dollars of market cap have been lost.
Many individual investors and investment companies have been wiped out in the aftermath.
Promising start-ups with emerging technologies have been shuttered. Layoff numbers in the crypto industry continue to rise.
With an eye on this crypto winter lasting for a while, here are some ways that you can hunker down and survive it.
Diversify Your Holdings
Diversification is one of the first investing rules, even in good times. That adage might be even more true in tough times. Don’t only look to diversify your holdings, but where you hold them by using different exchanges and wallets.
Get Back To Basics
Downtimes are a great time to step back and take a lot at what you’ve been doing to see what’s worked and hasn’t. If you don’t understand the principles and technologies behind the crypto industry, this is the time to learn them.
Use Dollar-Cost Averaging to Reduce Your Risk
As a rule, dollar-cost averaging (DCA) works well for investors with a lower tolerance for risk. Instead of investing lump sums, you invest the same amount of money at regular intervals over a longer period, regardless of the price. Look for DCA coins with good fundamentals and a community that continuously works on their protocols.
Don’t Panic Sell
We’ve mentioned that crypto winters generate a lot of negative sentiment about investing in crypto. During every crypto winter in the past, someone has cried out that the crypto is dead.
Yet, here we are into our third crypto winter, and crypto is still here. Crypto might be a volatile investment, but it is still an investment.
Staking is locking your crypto on a crypto exchange or crypto-lending platform for a set time to assist in the operation of a blockchain while you earn interest. What it lacks in liquidity, it can make up for in stability.