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Lessons from previous crypto winters to recall today

15 Jul, 2022

Cryptocurrency prices continue to drag in an extended bear market, a so-called 'crypto winter' that has seen the collapse of less stable companies within the industry and disappointed many investors who were giddy with excitement during 2021's record-breaking highs.

The outlook may seem grim right now, but crypto veterans will know that this is just another phase in the bull and bear market cycles that characterise crypto trading. During previous cycles,  every returning bull run drove crypto prices to new all-time highs, making Bitcoin (BTC) and related tokens very high-returning investments over a period of four or more years. But during bear markets, it's not unheard of for prices to drop by up to 90% several times during the bear cycle. And while most cryptocurrencies recover, the weakest ones may permanently become junk.

The mental and emotional stress during a bear market can be intense as traders consider their decisions and risks. Should you sell everything? Double down and buy the dip? Diversify? Here's some wisdom and lessons learned from survivors of previous bear markets.

To HODL or not to HODL?

Calls to HODL, which essentially means never to sell, are common within the crypto community, no matter what situation the market is in. Bitcoin and crypto, in general, have historically vindicated this view, as new highs have been reached during every bull run. However, this is only a smart move if you take profit at some point. It makes no sense to hold on forever if you could use some profit now. Remember that many hodlers have a vested interest in preventing others from selling.

Experienced traders recommend a mixed approach: sell and take profit when you need some, but keep some of your investment in the market to appreciate. And don't forget: with StormGain, you can earn interest on your holdings.

Don't panic!

As always, successful trading means keeping a cool head and avoiding making decisions during times of intense emotion. When you sell, it should be to take the profit you need. But in any case, avoid panic selling just because prices are falling.

On the flip side, take care not to get too greedy when prices are rising. The crypto market is highly volatile, and if you keep waiting because you're afraid to miss the top, you might stumble into a crash when you wake up in the morning. Be sure to plan in advance the profits and losses that you would be comfortable with and set these limits to avoid getting carried away by emotion in rising and falling markets. Make decisions on data, not on feelings.

Don't get hung up on losses

Many new crypto investors who got into trading during the pandemic years saw their portfolio value spike in 2021 but missed taking those big profits and are feeling the pain now.

This can lead to risky trades to try and quickly 'make back' the value that they lost from the market crash. But it's important to leave your emotions behind and remember that this is a marathon, not a sprint. The market will take time to offer returns like the ones seen in 2021 again.

Do your research

One way to make money even in a bear market is to back a promising new crypto project that will increase in value by buying its tokens. The space is still buzzing with innovation, and new blockchain startups are popping up all the time. However, it's a highly competitive area. Many projects will promise everything to get attention, only to subsequently fail because their product or business model was not sound.

Survivors of previous bear markets did well by researching upcoming crypto projects, both completely new ones and established ones that were refining their products. If you can find a project that is developing the next big thing in crypto/fintech, you'll be well placed for the next bull cycle. Try to keep a smaller portion of your portfolio for new projects (known in crypto jargon as an 'ape fund') that could be rising stars.


However you feel about the bear market, bear in mind (sorry) that there are thousands of other people feeling the same way. Even if you have been priced out of the market, connecting to the community, building relationships and sharing knowledge can be a good way to stay involved in crypto and keep up to date with trends in the industry. It may even lead to opportunities in the crypto sector, such as jobs, token drops, etc.

Don't quit your day job

You may have read some recent interviews about people who regret quitting their jobs to trade crypto full-time. The bear market hit many of these individuals hard, and most people would have been better off holding on to a steady job that pays the bills.

But that doesn't mean giving up on your crypto dreams. With trading apps like StormGain that allow 24/7 access to the crypto market at your convenience, there's no reason you can't do all the trading you need in your free time while still having the security of a regular job. Take the best of both worlds; you don't need to be a full-time trader to make good money from crypto.

Keep some perspective

The crypto market never stops moving, and sometimes it can feel impossible for a mere human being to keep up. But it's important to keep in mind the other things in life besides crypto and finance. Otherwise, what are you trying to make that money for?

If crypto is all you ever think about, then your emotions will be consumed by the ups and downs of the market, so make sure to take some downtime to take care of your other interests, hobbies and friends.

Beat the bear market with StormGain

StormGain is the all-in-one crypto platform designed to give you the tools you need to profit in both rising and falling markets, thanks to our advanced analytics and easy-to-use platform. With unique features such as the StormGain Bitcoin cloud miner, which rewards active users with Bitcoin regardless of market conditions, interest earnings on crypto assets, and low commissions, StormGain has just been named the crypto platform of the year by two prestigious industry publications.

To find out what StormGain can do for you, sign up in just a few seconds and open a demo account to try these features risk-free in real market conditions!

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