What it takes to overcome the seasons of cryptocurrency meltdowns

Fredrick Awino

Exchanges, Margin, Trading, Trading in Cryptocurrency

15.07.2022

327 Views

If there is something that a cryptocurrency investor can’t afford to ignore is their volatility. Whether it is bitcoin or the various Altcoins that an investor chooses, it always boils down to how an investor cleverly manoeuvres through their high volatility. Volatility as a concept in cryptocurrency is good on one hand and tricky on the other. A meltdown in cryptocurrency is a constant fall in its value as a result of downward volatility. 

So this is what happens, when someone begins to trade in cryptocurrency, he or she would ordinarily buy from a cryptocurrency exchange. There is a whole list of cryptocurrencies that an investor can choose from at the chosen exchange. When trading cryptocurrencies, a trader has to be on very high alert and watch market trends. The knowledge of best time to sell crypto and best time to buy determine how much margin someone makes. This could not be the case in situations when the value of a crypto holding takes a consistent nosedive, what we here refer to as a meltdown. 

Get your head and heart around cryptocurrency meltdown

There can never be anything more assuring to a cryptocurrency investor than having everything well in control. Of course this may not be a common thing but once in a while, everything can be brought within control. Overcoming a  cryptocurrency meltdown would be every investor’s dream.

Any investment has its own challenges and so is crypto. If only to disappoint you a bit, anyone who tells you that cryptocurrency investing is a quick path to financial freedom, trash that information because it is a flat lie. A cryptocurrency meltdown will shock any investor, including the veteran investors. It triggers the tragic memories of those who have faced plunging crypto fortunes. 

As part of your investment journey, you are likely to have experienced it too. Meltdown is a common issue that investors deal with on many occasions. In simple terms, cryptocurrency meltdown is a seasonality that involves the sudden fall in crypto prices and occurs in a cyclic manner. Of course, as an investor, such a drastic fall may catch you off-guard and subsequently affect the value of your investment if at all you were not prepared.

Master resilience tactics to safely navigate through cryptocurrency meltdowns

Everyone has been a witness to the recent sensational news that almost all cryptocurrencies were on a meltdown. From major financial news media including Forbes, Economic times and even reputable journals such as New York Times, headlines have variably mentioned “meltdown.” The nature of this information has really sent investors scratching their heads and potential ones reconsidering their ambitions. 

Any long term cryptocurrency trader must brace themselves for meltdowns at various points in their journey. If you have not already gone through a full crypto meltdown, then it’s coming someday, somehow. This is not a warning but a notice that cryptocurrency meltdowns can be frustrating moments. The reality is that digital assets such as Bitcoins have a high level of meltdown. Therefore, you should be prepared to handle its associated risks when such fall occurs, lest you experience an immeasurable amount of losses in your investment. 

So what does it generally take to go through the seasons of cryptocurrency meltdown?  In this guide, we will look into the strategies that investors can use to remain afloat, during the unbearable seasons of crypto meltdowns.

Tactics to Remaining Afloat through Crypto Meltdown

We don’t promise to give anyone a silver bullet to help them through the devastating experiences that come with crypto meltdown. All we can promise is to try and help you think through the many things that make people tumble and tragically give up when cryptocurrency comes beckoning. At the end, our goal is to prevent more headlines like “Taiwanese man commits suicide after losing nearly NT$60 million from Luna crypto crash”

Doing most if not all of the following things will help a cryptocurrency trader safely go through a ferocious meltdown; 

1. Avoid emotionality and Stay Calm

Although emotionality is a common thing within the cryptocurrency space, you must learn how to stay calm when the prices crumble. Whether you want to make a decision to sell a cryptocurrency or see it as an opportunity to acquire more, it is important to remain vigilant. Any attempt to make an emotional decision especially when trading in your coins will result in nothing good but loss.

Advisably, you need to reflect on your overall trading objectives and financial goals before doing something silly or succumbing to panic response to a crypto meltdown. Here, you will ask yourself two fundamental questions based on whether you are investing for a future long-term opportunity or just short-term trading.  Either way, your answers to those questions will play a vital role in guiding you towards making a proper decision to sell them cheaply, or buy more for the future.

2. Assess the situation and HODL if possible

The overall idea behind HODling is to keep until the prices rise. You must be a smart investor to survive within the cryptocurrency ecosystem. Here, you are required to stay vigilant to benefit from any information that might be prevailing within the cryptocurrency market. Is there any factor driving the crypto prices to fall? Ideally, it is possible that at an event of any meltdown, you will be able to get information about the factors contributing to the price fall and recommendations available from other investors.

Although many crypto gurus and proclaimed experts have continually stated that cryptocurrencies possess intrinsic value, it is not the case. The success of many coins in the market is due to the perceived value. If you have coins such as Bitcoin, Ethereum, Ripple, Litecoin and others, it is advisable that you wait for their values to rise again and thereafter sell them at a profit.

3. Do not attempt to Time the Market

Largely, cryptocurrency meltdown implies that finding a time in advance to buy or sell your coins is a problematic scheme. When push comes to shove, you might be tempted to get into the market to trade your cryptos some other time, but it is not advisable. Ideally, it is not possible to time cryptocurrencies.

In the case of meltdown, it is important that you approach it with an extremely flexible but unemotional mentality. Like any other assets, the cryptocurrencies market cannot be timed. Thus, you can remain afloat when trading cryptocurrencies only if you are able to understand the changing beliefs attached to them and subsequently respond to them appropriately.

You can also consider preparing your finances for use when there is a sudden drop in the cryptocurrency market. Attempting to hold your funds longer will be an excellent move to handle the cryptocurrency meltdown.

4. Embrace Diversity

You might well be aware that diversification is not easy within the field of cryptocurrencies. However, you can decide to give it an economist approach. Here, you can treat it as though there are many aspects of cryptocurrencies; they are broadly interrelated and therefore any effect on one aspect affects the other.

Diversification in this case means avoiding putting all your investments within the cryptocurrency space, unless you are interested in gambling. At least, it is recommended that you only invest a portion of your larger investments into the cryptocurrency.

5. Use other methods to generate income; you can avoid Trading

Cryptocurrency meltdown comes with numerous uncertainties for the future. Once the prices fall, you are likely to act with emotionality, which may possibly yield nothing. This is why, in my opinion, you should be able to think beyond such meltdowns and perhaps other ways of generating income.  

You must be aware that there are methods you can use to make legitimate money with cryptos other than the popular trading. These include staking your cryptos, earning dividends from them, crypto mining and many more. Depending on your investment goals, you can continue to earn some passive income as you wait for the prices to rise.

6. Endeavor to Hedge against Risk associated with Meltdown

Considering the particular set of situations surrounding cryptocurrency investment, it is advisable to explore the options that may be suitable to you. The concept of volatility within the crypto ecosystem is common. In a situation whereby the cryptocurrencies constitute your major investment, you can work smart to hedge your visibility within the crypto space through a variety of coins. Be wise to choose coins that have significant correlation in their response to price fall or market factors. 

Just in case you forget everything, here are our Final Words

Cryptocurrency meltdowns will come, one way or the other in the life of a trader. It is not all doom and gloom because so many have come out even more vibrant. Do not despair, not time to act silly. There is always a possibility of a vibrant comeback from cryptocurrency meltdown. 

Should you forget about everything, just remember that investing in digital currencies needs a high level of technical expertise and to some extent, considerable attention. The cases of meltdowns and volatility are on the increase within the cryptocurrency space. You should therefore remain focused on the existing cryptocurrency trading concepts, and learn more about the peculiarities within the crypto markets. Yes, meltdown exists, but with proper preparation and strategy, it is possible to maximize your advantages.