Crypto investors and traders are subject to increased anxiety when steep market declines occur. The crypto market experienced a relative decline in 2022 that continued into 2023, worrying many investors concerned with the future of crypto investment portfolios. Some popular cryptos have experienced more than a 20% decrease in market price; however, short-term decisions can affect the potential benefits of longer-term crypto trading. It should be acknowledged that the crypto market experiences the same highs and lows as any other market in the economy. Thus, crypto investors must be more vigilant when making short or long-term decisions, and there are strategic steps to survive the ongoing crypto winter. This article gives an overview of some simple steps to help refocus on your long-term goals as a crypto investor and lend support through the crypto winter.
Focusing on cryptos with a large cap
BTC (Bitcoin) and ETH (Ethereum) are the most popular cryptocurrencies in the market, providing over 50% of the total cryptocurrency market capitalization. Some crypto investors have branded these two digital currencies as “blue-chip cryptos.” However, while there are many more cryptos in the market, these two are less volatile and thus less risky. Although BTC and ETH do not offer the risk protection and safety of the traditional stock market blue chips, they come with some assurance due to their proven history. Ultimately, new cryptos cannot guarantee investors the same assurances during the current crypto winter.
Diversifying your crypto investment portfolio
The common phrase “don’t put all your eggs in one basket” can be applied to virtually every financial decision. In the crypto market, some investors brand themselves as “Ethereum maximalists” or “Bitcoin maximalists” – another way of saying that they only invest in one single cryptocurrency in their portfolio. These investors believe that other cryptos cannot offer the same risk-reward that their preferred crypto can. However, although this strategy was effective when the crypto market was in its infancy, this breaks the “eggs in one basket” avoidance rule for successful investing. Ultimately, there are thousands of cryptos – it is recommended to take more time to research and understand more about each crypto before investing. To build a successful investment portfolio, diversification is key to reduced risk: a balanced portfolio is a secure one. Cryptos are divided into different markets, thus making it easier for investors to pick their preferred cryptocurrency. Furthermore, it is recommended to choose cryptocurrencies with a high market cap.
Some additional tips to survive the Crypto Winter
-Do not invest more than you can lose. Crypto is a relatively new market and is thus still volatile, so avoid investing all your money in one project.
-Research each crypto project carefully. Each coin and token is attached to a different managing body, so ensure to evaluate these fully before committing.
-Trust your intuition. Although crypto communities are a useful medium to discuss investing with others, there is a plethora of wildly variable advice – not all of which is worth taking. It is advisable to do your research and trust your decisions – and learn from your mistakes.
-Be confident to adjust your portfolio. It is important to be flexible and adjust your portfolio where necessary. This can allow for a more adaptable and diversified set of investments.