What Is a Crypto Winter?

A crypto winter is an extended pe💖riod of depressed crypto asset prices compared w🐷ith prior peaks. Similar to a bear market in stocks, a crypto winter can lead to widespread losses for investors.

How to Know You’re in a Crypto Winter

Crypto winters typically extend from well-known currencies like Bitcoin and Ethereum to non-fungible tokens (NFTs) aไnd lesser-known cryptocurrencies.

Crypto winters may coincide with other economic declines or a bear market in the stock market, but that's not always the case. Cryptocurrencies are a much newer asset class than stocks and have moved independently of other markets.

As a newer asset, crypto winters aren't as clearly defined as downturns in other markets. If treated like a stock market's bear market, a crypto winter would occur when 澳洲幸运5官方开奖结果体彩网:prices drop by 20% or more from recent highs, but this is🤡 a frequent occurrence i🅷n the crypto markets. Prices need to fall much more and stay down for an extended period.

There are several barometers used f♉or crypto prices that can be used to judge the markets. These include the S&P Cryptocurrency Broad Digital Market Index (SPCBDM), the Bloomberg Galaxy Crypto Index, and the S&P Cryptocurrency Top 10 Equal Weight Index.

However, Bitcoin's price is generally an indication of overall market sentiment and valuation, so simply monitoring it can tell you whether you're in a crypto winter or not. You'll also hear investors and the media complaining about it often and loudly.

Should You Sell All of Your Crypto𒀰 in a Crypto♑ Winter?

In the stock market, many investors believe that the market will even🥂tually recover from any🐭 downturn. History proves this true, but there’s no guarantee that markets will always go up. In reality, only time will tell.

While investors are very confident in stock market averages, 澳洲幸运5官方开奖结果体彩网:cryptocurrency has many fans and skeptics. The oldest stock exchanges in Europe are huജndreds of years old and the New York Stock Exchange traces its roots back to 1792. This gives investors confidence that markets will survive the ups and downs of economic cycles.

Bitcoin started in 2009. While it has several years under its belt now, it’s still very new compared with traditional investments. That leaves more questions about the future of crypto and its ability to recover from a drawn-out period of falling prices. It’s best to keep the risks of any investment in mind when deciding how much to hold and what you can afford to lose.

5 Tips to Survive a Crypto Winter

If you get a sick feeling in your stomach ꦓlike 💙a roller-coaster ride when crypto prices fall, consider these tips to survive a crypto winter:

1. Don’t invest more than you can afford to lose: Crypto is still fairly new. It’s highly risky and volatile. Smart investors avoid putting in more than they can afford to lose. It’s not wise to invest your life savings in any cryptocurrency.
2. Carefully evaluate each crypto project: Every coin and token is tied to a different managing entity or volunteer group. Some have proven to be scams. When it feels like a Wild West, it’s important to carefully evaluate each crypto project before deciding how much to invest.
3. Beware the herd mentality: 澳洲幸运5官方开奖结果体彩网:WallStreetBets and other online communities are fun places to learn about and discuss investing, but that doesn’t mean you should take everyone’s advice. Online discussion boards are filled with hobbyists who are not your friends in real life and are not affected if you lose your shirt in the crypto markets. Stay focused on your personal goals and risk tolerance when investing. 
4. It’s OK to make portfolio adjustments: In poker, there’s a tendency for players not to fold a hand on a large bet even when they believe they’ll lose. It may seem logical to bluff and bet even more to avoid losing what’s put in, but if the money is already lost, then putting in more chasing your sunk costs leads to more losses. You don’t have to 澳洲幸运5官方开奖结果体彩网:HODL your crypto that’s down if you don’t think it’s coming back. It’s OK to sell and make portfolio adjustments whenever you deem it necessary.
5. Consider buying the dip: Conversely, if you believe a cryptocurrency downturn is temporary, you may want to buy in at lower prices, hoping to buy low and see the value of your portfolio grow while the markets recover.

If you have any questions, it may be best to consult a reputable investment professional who is knowledgeable about cryptocurrency markets.

The Bottom Line

While cryptocurrencies hit a ro♚ugh patch in 2022, investors with long-term outlooks weathered the crypto winter and came out much better off than they would have with a short-term perspective.

Those who bought and held cryptocurrency during the last crypto winter experienced incredible gains in only a few years. You shouldn't assume that the recovery and skyrocketing market of the past will happen again, but it is a sign that crypto winters can turn into crypto summers.