9 Survival Tips for Crypto Winter
Jeff Wilser gathers advice from traders who've seen this movie before.
Since you rolled out of bed, how many times have you checked the price of bitcoin? How often have you checked your portfolio? How many podcasts, articles, YouTube videos, Reddit posts or Twitter threads have you devoured to learn about whether the bear market’s “bottom is in”?
If the answer is greater than zero, you might be doing it wrong.
“To mentally be able to survive, you need to tune it out,” says Scott Melker, aka The Wolf of All Streets. He’s telling you to ignore the price, the trading and the obsessive checking of your phone at three in the morning. “None of that is productive in a bear market. It’s literally just giving you an excuse to make a poor emotional decision.”
Other quick tips for surviving Crypto Winter:
Go running. Or swimming. Or hit the gym. Just do something physical
“Health is the real wealth, period,” says Dovey Wan, founder of Primitive Ventures. “The bear market is a great time to focus on self-improvement and get your body and mindset ready for the next run.”
Then you can go one step further and do the following …
Break up with your portfolio tracking app
Dan Clarke, a crypto consultant based in Singapore, says that during the bull run, he was hyper plugged in, spending time on “exotic trades” and “centralized yield farming.”
Then came the bear market. To preserve his sanity, Clarke put a halt to his trading and motorcycled across Indonesia, eventually moving to Bali for a “quieter and more relaxed life.”
Perhaps most important, Clarke deleted his portfolio tracking app. He would go cold turkey, as it’s depressing and deflating to get constant reminders of “how much you are down from your portfolio all-time high.”
Avoid the chop
Seasoned traders consider the current market conditions to be “choppy,” the bleakest environment for newbie traders. Or any trader, for that matter. “It’s bad for both short and long biases,” says Melker. He explains that when the price gets to the top of a certain range, “the shorts get liquidated,” and then when the price tumbles back to the bottom, “the longs get liquidated. Rinse and repeat. It’s benefiting no one.”
In other words, unless you’re somehow cranking out consistent winners, maybe quit with the intraday trading.
For God’s sake, avoid leveraged trading
As did Welker, Wan points out that prices tend to “range” in a bear market. She says that the ranges can lead to especially low EVs (expected values) for leveraged trades. “From the stats, we know most retail [traders] with leverage are just ending up in a net loss over time."
A better option?
If inclined to invest, stick to dollar cost averaging.
Most financial experts – in both crypto and traditional finance – endorse the concept of dollar cost averaging, which is essentially the logic behind automatic payments into a 401(k) plan. It’s a way to passively and automatically invest without stress. And in a bear market, dollar cost averaging can be your hero.
“Dollar cost averaging is price agnostic and market agnostic,” says Melker, adding that it takes advantage of the tendency of markets – over the long run – to climb. Short-term trends are hard to predict. No one knows whether the price will go up or down in the next five minutes. But the next five or 15 years? “The more you zoom out, the more it’s almost guaranteed that the price will eventually rise, which has been the case with effectively any meaningful market in history,” says Melker.
There’s no guarantee that the price of bitcoin will eventually go up, of course – and this is not financial advice. But the point is that, if your thesis is that bitcoin is a good long-term investment, “to stop dollar cost averaging now when the price is down defeats the entire purpose,” Melker says.
If (*if*) you believe in the long-term future and price appreciation of bitcoin, you’re scooping it up on the cheap. Enjoy. (Obligatory disclaimer: I am not dollar cost averaging and scooping up bitcoin because I’m a writer who’s just trying to pay the bills, but I do own some bitcoin.)
“I love bear markets,” Elizabeth Stark, the driving force behind Lightning Labs, once told me. “It’s a great time to build. It’s less distracting.”
Waves of crypto entrepreneurs and developers have said something similar, eager for the chance to actually do the work of building cool stuff as opposed to getting swept up in the euphoria of a price bubble.
Melker suggests that even if they’re not exactly building a crypto startup, investors can leverage the same mindset. He says this is the ideal time to “remove the FOMO and the concern about price and the urge to flip from one coin to another.” Instead, dive deeper into research. Which projects have a vibrant developer community? Who’s actually building something meaningful? How active is their GitHub? This is the time to research those questions, says Melker, “to put your head down and figure out where you want to allocate funds.”
On a related note … as for bitcoin itself?
Go even deeper
“The key is to invest in what you know. You should own things you know a lot about,” says Cory Klippsten, founder of Swan Bitcoin, a bitcoin-only exchange. The price of bitcoin is volatile. Everyone knows that. If you just bought some bitcoin with the fuzzy hope that the price will go up, that volatility can cause heartburn.
But if you’ve truly done your homework? “You can really only weather these storms with a sense of calm and stoicism if you actually believe in the reasons you hold it,” says Klippsten. “If you can actually contrast [bitcoin] with other forms of money and other asset forms, and actually believe in the strength of what bitcoin is and where it’s going, then it becomes easy.”
Take comfort in the misfortune of others
Melker points out that unlike the crypto bear market of 2018, at the moment, U.S. equities and especially tech stocks are stuck in reverse and that “everyone, everywhere, is feeling the burn.”
Or, if this advice strikes you as cynical, simply think of it as: “Know that you’re not alone.”
Focus on relationships
“Hug your kids and kiss your wife,” says Melker. Or your husband or boyfriend or girlfriend or buddy. The point is to remember that people-action is more important than price-action. (Especially when the price is down.)
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