Crypto winter has arrived. Is it wrong to use cryptocurrency ?

Molly Babeh

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1/ Has Crypto Winter Really Arrived?​

Unexpectedly, in 2021 Bitcoin (BTC) failed to break above $100,000. Instead, the price of BTC turned down and at one point reached lows in the $33,000 region (January 24, 2022). Although on-chain indicators always show positive signals, it is inevitable that a Crypto winter is really approaching.

Going back to the 2018 Crypto winter, we see that it took BTC price about 370 days to fall from a peak ($19,800) to a low ($3,128). This means that the BTC price lost about 84% of its value. From the peak of $ 69,000 set in November 2021 to now, the BTC price has lost about 46% of its value, in a period of 103 days. If the Crypto Winter 2022 really comes, based on historical data, BTC price could fall to the level of 11,000 USD. Therefore, investors need to keep an eye on the Crypto trend. When the trend is up, it means that BTC price will grow rapidly, but if the trend is down and there are many bearish signals, such as indicators on all time frames and volume data trends, it would be wise to wait for a correction before buying Bitcoin.

This view is also supported by some industry veterans. Du Jun, co-founder of crypto exchange Huobi Global, believes that the next Bitcoin bull run will not take place until 2024 and is likely to happen after the fourth Bitcoin Halving cycle, which is expected. will take place in July 2024.

On the other hand, Ethereum co-founder Vitalik Buterin is optimistic that a crypto winter could be quite beneficial for the industry, even welcoming it. According to Buterin, if the Crypto winter occurs, it will contribute to promoting technological innovation and be a reagent for sustainable and quality projects. Buterin said lower cryptocurrency prices can contribute to nurturing long-term sustainable projects while eliminating short-term speculative attention.

Of course, from the perspective of a speculator, chasing short-term profits, the Crypto winter is something of an obsession. So how can we survive in such a gloomy market for such a long time? Here are some suggestions just for you.

2/ What should be done to “survive” in the Crypto winter 2022 ?​


Limit investments in cryptocurrencies with high volatility​


When a widespread market downturn begins, perhaps the first step we need to take is to reassess the assets we hold. In a bull market, most coins will go in the same direction as Bitcoin. However, when the market is down, just as Buterin said, poor quality projects will gradually be eliminated. So if you are holding trending coins, consider these holdings again. Deciding not to sell assets when the market is down can be a good move. In fact, as Warren Buffet said, "Be greedy when others are fearful."In addition, trading in and out of positions has been proven to be a successful strategy for achieving long-term success. The key is determining what moves you are comfortable making on your.

Most of the ICOs in this category are typically "out of trend" and a lot of them are not even functional. For instance, they may be related to meme coins or projects that re-base their code to an another cryptocurrency. This is because these projects have a lot of short term investors. They are only looking for profits so when the price drops, they will most time leave the project. It is important to have a long held project with a huge community. This will make your project develop slowly and steadily.

Think in terms of price averaging​


Price averaging (DCA) is the process of buying an asset over time in order to be able to own an asset at the lowest price over time. While the DCA strategy is a good way to increase ownership in each project, it usually only applies to potential projects. The focus of dollar cost averaging should be on projects with active development, engaged communities, and a road map that outlines how the project will continue to grow and become viable in the future. A good example of a project that is currently in development and focused on continuing to grow, and an active community is the Bitcoin Cash hard fork. The project has been in development for several months, with a dedicated team working on the code. With over $3 billion USD market cap at the time of this writing, there is a lot of potential for growth in.

Staking your coins is a good way to increase profits​


Staking is perhaps the simplest way to increase the value of a portfolio over the long term, and it removes the obsessive pressure of daily price fluctuations. Simply because collateral assets are still profitable for users during the gloomy market times of Crypto winter.

Most Layer 1 protocols offer the ability to staking their native coins on the network for profit, including Solana (SOL), Cardano (ADA), Polygon (MATIC), and Avalanche (AVAX). Ethereum (ETH) holders can also stake their ETH on the beacon chain for Ethereum 2.0. In this case, it should be noted that the reward and amount of ETH participating in staking will not be received until Eth2 is officially launched.

Find projects with an existing ecosystem​


The latest trends can sometimes be even more important than the older ones, for example MetaFi, Web 3.0 or Fan token. With a bull market coming on, it could be time to learn about these new trends and see how they affect the markets.

In addition, projects that help token holders earn money through staking, liquid staking, borrowing and airdrop, etc. are also worth considering when the market turns bearish. Staking is the simplest form of this as the number of tokens will increase over time. Meanwhile other options include token launchpad, NFT marketplace and known protocols for providing airdrops to community members.

Invest in yourself​


When the market goes down, that will be the time when you have more "leisure time" instead of having to constantly follow price fluctuations. Therefore, take advantage of this time to invest in yourself by learning something new. Not only will this help you gain more knowledge about the market, but it will also help you build sound trading strategies in the future. Diversify your portfolio. Diversification is a risk management strategy for asset allocation. This means that you have a variety of different investments and this decreases the overall risk of losing all your money in one company or industry. For example, if you have investments in several different companies, there is less chance that one will fail.

Epilogue​


In fact, Crypto winter is a concept that refers to a time of market downturn. That is when the coin loses most of the value it accumulated in the previous period. For many optimists, the crypto season is a series of opportunities for them to accumulate the necessary things to prepare for a new growth season. Not all traders will agree with this point of view, but for others, it is important to see the long-term benefits and not just the short-term price fluctuations. Those who are holding coins with a longer outlook, in contrast to trading day traders and quick investors, might take risks in order to secure their future profits as well as to ensure that they have enough funds to pay for their day-to-day operations.

If you found this article helpful, follow Molly.com for more interesting articles about the current crypto market.​


Thanks for reading,
MollyBabeh
 
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