Crypto Crash: Here’s What to Do During a Crypto Crash

Paigambar Mohan Raj
Source: DataDrivenInvestor/ Alo Moves Blog

With massive liquidations hitting the crypto space, markets have been left with quite the shock. On the 12th of May, Bitcoin, the original cryptocurrency had breached the $28k mark, down by 10.9% on the daily charts, and 29.6% on the weekly chart. BTC is currently 59.9% down from its all-time high of $69,044.77, which it attained 6 months ago on the 10th of November, 2021.

However this is not the first crypto crash, and most likely won’t be the last. And with every crash comes the fear of losing your investments, which is completely natural. So, in that regard, let’s take a look at some of the things to keep in mind during a bear market.

Avoid Blindly Buying the Dip: Buying the dip simply means buying into an asset when the price drops. This is common practice among many investors, and many a time, it works. The notion is that the new lower price constitutes a bargain since the ‘dip’ is simply a temporary blip and the asset will rebound and improve in value over time.

However, in a market that is as volatile as cryptocurrencies, it could be difficult to know when exactly a dip appears. The asset could fall further, leading to even more loss of investments. It is important that an investor knows how the assets behave, and their history in the past.

Diversify Your Investments For Better Security: Diversifying adds a layer of security for your money. This basically means to invest in a variety of assets, so that a dip in one, and a surge in another will keep your balances in check.

Investing in a diverse range of assets such as stocks, bonds, real estate, crypto, etc. will make sure your losses are not as heavy as they would have been if your money was on just one asset class.

Don’t Freak Out & Panic Sell: While it is natural to want to get out of an investment when it is falling, however, markets usually rally back up eventually. It is very important to not get emotional when the markets crash. Every crash is an opportunity, and hence it is of the utmost importance to not panic. It is through volatility that traders make money, and so can you. Every time Bitcoin has crashed, it has risen to new highs. So make sure you are aware of the past crashes before you make a decision.

At times like this, it is obvious to have a feeling of uncertainty. So, take a deep breath, relax, and do your own research. Markets will continue to rise and fall, but you will be here to witness it all. Hence your mental health and peace is the most important thing to keep in mind.