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As the stock market struggles in bear market territory, you might hope that your cryptocurrency is at least seeing better returns. That's decidedly not the case.StackCommerce
The crypto market is dipping just as severely as the ordinary stock market, costing investors untold sums of money and wiping out nest eggs and retirement savings. But that's not necessarily reason to feel hopeless. There are opportunities in the dip to gain and maintain wealth. Here are some strategies to pursue during this trying time.
Related: Understanding the Rise and Fall of the Cryptocurrency
As they say on the Reddit threads, "hodl!" Basically, that means don't sell. Cryptocurrency is volatile by nature, and the first rule of investing is to sell for more than you bought for. Sure, you may have lost some money in the short term, and your investment isn't looking too good, but don't make any rash decisions based on panic.
Just as you would with any other financial situation, you must remain calm and keep a clear head. Ask yourself if you're investing because you believe in the long-term opportunity or want to make a quick buck. Yes, there are benefits to both lines of thinking but sometimes strategies change. If your short-term gambit isn't paying off, recategorize it as a long-term investment and let it go for a bit.
Again, crypto is volatile. That means it's likely to swing rapidly up at some point, too. From that perspective, the best thing for you to do may be nothing at all.
2. Educate yourself
Before you start selling, it might be time to admit you didn't understand cryptocurrency quite as well as you thought you did. Give yourself an education on crypto and all things blockchain in The Beginner's Guide Cryptocurrency Trading, NFT's Metaverse Bundle.
If you're already invested, you may not need the absolute beginner courses that this bundle provides, but anyone can benefit from the technical analysis training. You'll learn the three cycles in the cryptocurrency market and three strategies to identify the current cycle. Through the training, you'll learn how to identify the best opportunities, how to spot the loser coins, and how to make the best trading decisions based on what cycle you're currently in.
Beyond crypto, the bundle also includes courses on creating and selling your first NFT and gives you a primer on the newest digital frontier, the Metaverse.
3. Diversify your assets
It can be tempting to buy when the market is down, but it's wiser to use this time as an opportunity to diversify your assets. You don't want to risk financial ruin by having all of your money in such a speculative pursuit as the cryptocurrency market.
What should you buy instead? Consider going the traditional route by investing in the regular stock market. Sure, it's down too, but do you feel better about Amazon and Apple bouncing back or Dogecoin bouncing back?
The stock market offers myriad opportunities, whether you're looking for cash payouts in dividend stocks or trying to mitigate risk by investing in index funds or bonds.
Best of all, try to buy property. The market collapse has proven yet again why real estate is such a valuable investment. You don't need to shell out to buy a property outright these days thanks to the existence of piecemeal programs like REITs.
4. Set limits to "buy the dip"
"Buying the dip" means you use drops in the market to buy up as much stock as possible, believing that it will ultimately turn around and you can earn a killing on your investment. In the traditional stock market, this is sound logic as cycles are somewhat predictable and the market generally always rises over time.
In the crypto market, it's a little more of a question. It's a relatively new idea, and market swings have been so dramatic over the past five years, that it's hard to predict how or when the market will recover. It's also hard to predict which coins will be good opportunities and which won't. Buying the dip could mean you pump much money into a losing prospect.
If you want to buy the dip, that's fine. Just make sure you aren't betting your life savings on a prompt run from the crypto market. Set limits on yourself when buying and make sure to spread your investments around. Bitcoin and Ethereum are generally solid bets as the most established and mainstream currencies, but it's smart to invest in altcoins, too.
5. Day trade the altcoins
Speaking of altcoins, the crypto market is so diverse. There are just about always coins making surprising runs despite the rest of the market being in the gutter. On the CoinMarketCap Gainers Losers, you'll find a few altcoins making tremendous gains every single day. Even during the crash, you can make big money on the right altcoins.
Unfortunately, trading altcoins is almost like throwing darts in a power outage. There's often little information available about them, and could very easily be a scam run by development teams looking to cash in all the tokens and taking the entire profit for themselves.
If you do day trade, do so thoughtfully and carefully.
Prices subject to change.