Weathering the Crypto Storm

Crypto investors may be left reeling from losses over the last few months. But that is not to say all is lost. The good news is that a crypto bear market is unlike a traditional one, with the high volatility and wide-ranging opportunity meaning no two days, even minutes, are ever the same. Here, Kristjan Kangro, CEO and co-founder of Change, a leading Estonian investment platform, explores:

We’ve all seen the headlines. Some say that the crypto bear market could last two years and that a bitter crypto winter is here. That Bitcoin and the like will continue to slump. But that is not to say it’s time to cash in your chips. While the news reports may, by design, ignite worry or even panic, the reality is that the situation isn’t near as grave as it might appear.

For the first part, this is not the first time that crypto investors have weathered such a storm. By its decentralised nature, crypto is much more changeable than the traditional market. Assets can see huge increases or decreases in price from one day to the next.

It’s also important to note that while the current crash may have a short-term negative impact, in the long-term it could mean that the coins and crypto projects that survive rocket in value. Seen as a ‘cleansing process’ of types, this could offer a good opportunity for newbies to enter the crypto market for the first time ever at historically low prices.

With this in mind, there are several tried and tested investment strategies that can help you weather the current crypto storm and build your wealth throughout.

First up, it’s important to be patient. As with anything in life, it’s never a good idea to react out of fear and panic, but rather consider your options. Remember, this isn’t the first time cryptos have lost value, only to rebound and reach new heights. From my own personal portfolio experience, I do believe there’s a lot to be said for ‘the long-term investor always wins.’

At the same time, do your research. Look at your options, your overall portfolio and the broader financial picture to decide your best course of action. Don’t just buy because others are. Don’t short because others are either. Weigh up your options based on exactly what you have and what level of risk you can afford to take. If you don’t need the cash immediately and it feels right, sit tight and try to wait it out.

It sounds obvious too but, diversify. It’s never wise to have all your eggs in one basket, especially during a bear market. A broad selection of investments will always create a more stable portfolio and mitigate some of the risk. I, for example, always tend to mix up my portfolio with a range of established market leaders and a selection of more niche coins with interesting applications across different sectors. This has continued to serve me well and limit my exposure during any difficult period.

As seen in previous crypto winters gone by, there is also a lot to be said for investing in a downturn. Yes it might not be for the faint hearted. You might even think you’re buying at a low, only to see your assets continue to decline in value. However, it could be a risk that pays off. If your coin has a long-term potential it could be a risk which pays serious dividends.

Depending on your risk appetite, another route could be to move towards passive income opportunities such as yield products. Although the gains might be more conservative, it offers a more gradual, and less exposed way to make a profit. Better still, it involves no continuous trading effort. At Change, for example, since launching our Growth Pocket high-yield account at the end of last year, we’ve helped create 100k euros worth of passive income for our community.

Lastly, although it may be hard, it’s important to try to not buy into all the headlines and ‘expert reviews’, much of which may be designed to scaremonger and capture your attention. This is, after all, not crypto’s first crash. And just like the crypto and traditional bear markets before, it will come to an end probably sooner than you think. The likelihood too is that it will drive best practice, as consumers gravitate to those companies who are regulated and offer a certain level of protection.

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