Cryptocurrency prices have fallen sharply during the last month and a half. MicroStrategy (MSTR) was once sitting on significant profits in its Bitcoin portfolio before this crash started. That profit now is at 20% (MSTR holds 124,391 BTC at an average cost of $30,159). Tesla (TSLA) is in a similar situation - 42k BTC at $31,620. Many of the new investors may be like El Salvador (The country's Bitcoin holdings are now down 23%). Even diversification would not have helped as the cryptocurrency market cap is down nearly 50% from the peak of $3 trillion in December 2021.
It doesn't feel good to lose money anywhere. Especially cryptocurrencies because investing in this space comes with the hope of being super-rich one day. The risk is also super high as cryptocurrencies are extremely volatile so when corrections happen, they are in the range of 30% to 50% and that can easily wipe out the profits of investors. So what can one do in such turbulent times?
Buy the dip and improve your technical analysis skills
"Buy the dip" & "HODL" are universal truths in the crypto world. It is not easy for an average retail investor to deal with the volatility of the crypto world. Buying the dip helps in bringing down the average cost of your portfolio and it will eventually benefit you in the future as markets reverse. Reversal can take time and therefore, it is critical that one does not invest everything in cryptocurrencies. You may need cash for an emergency and selling your portfolio at a 30% loss will make you feel even worse than your notional loss.
Bear markets are a great time to improve your ability to read charts. Understand how cryptocurrencies behave relative to other markets. Read analysis from multiple sources. Understand what financial market behavior is doing to cryptocurrencies. How are leveraged traders behaving? The more information you absorb, the less you will focus on your portfolio and the better you will get at dealing with future downturns. Improving your chart reading skills will help you get better entry points for your "buy the dip" strategy. It will also help you get rid of anxiety about when the correction will get over. Being an informed, well-read individual in this space will help you in the long run.
Look at other projects
There are many times when we invest in crypto assets that are hot, without understanding why that is the case. Why are there so many Ethereum killers, yet most transactions of DeFi and NFTs happen on Ethereum? What will happen to Ethereum killers when Eth goes to PoS? Is it easy for projects to move the user base and products to another blockchain protocol? The point of the questions is that one should use this time to deep dive into crypto projects of interest. Listen to experts in this space to understand the relevance of all the FUD in the markets.
Try to earn instead of buying
I strongly believe that when you lose money on your invested money, it hurts more than losing the value of money you earned. If inflation is eroding your purchasing power then that does not feel as bad as losing money on a stock or house you purchased. NFTs are all the craze right now. Play2earn gaming is something one should explore. Blogging/Vlogging is something one can explore. There are so many things to explore and improve at, that one does not have to buy cryptocurrencies. In fact, right now everyone is building products. The crypto world is still evolving to produce mass-market products. The rising tide will lift all! So no matter what crypto you earn, it has a high probability of going up in value when markets start going higher.
Something you should not do
There are plenty of scam channels on YouTube that give utter bullshit advice about 5 altcoins you should buy during the crypto winter or tell you about a market signal that could signal that we are headed to the moon. This is just sensationalism and is just like Fud. If you do the 3 things mentioned above you will be able to spot these junk channels immediately and never fall into the trap of these idiots. They are only making money through YouTube ads by creating sensational videos and do not know anything about any crypto project. They have no relevant background to assess the industry and lack any understanding of how money moves markets. Stay away from them.
Hope this article seems helpful. Buy the dip, learn, and add new skills to your crypto resume.