Crypto Winter Is Here – How to Manage Your Assets During a Cryptocurrency Bear Market

Bitcoin coins in a close-up shot, digital currency price crash concept.
24K-Production / Getty Images

Crypto winter — the cryptocurrency equivalent of a bear market on Wall Street — has arrived.

See: 36% of Employees Want To Be Paid in Crypto: What Are the Pros and Cons?
Find: Experts Address 5 Biggest Crypto Concerns

While financial experts have a specific benchmark to define a bear market, which means that stocks have dipped by 20% from their highest value, the definition of a crypto winter is not as specific. Generally, if prices drop and remain low for an extended period, investors and experts will declare a crypto winter. And, indeed, that time is here.

The dip in the market has been accompanied by lay-offs at some of the major crypto exchanges, including Gemini. Coinbase, for its part, said it would be examining its headcount and is currently in a hiring freeze.

You may not be surprised to learn that the term crypto winter is believed to come from a popular meme and phrase from a TV show. In “Game of Thrones,” the House of Stark would declare, “Winter is coming,” as a warning of prolonged conflict and hard times ahead.

Building Wealth

Also not surprisingly, the online community of crypto investors has gathered to share their best tips for surviving the crypto winter on their preferred social media platforms.

Use Dollar-Cost Averaging to Reduce Your Risk

NFT collector @Krissyos, on Twitter, offered tips for crypto and NFT investors in a 24-part thread. The first tip was to use dollar-cost-averaging (DCA) to restrict “your potential upside to mitigate possible losses.” By spacing out your investments, you don’t have to guess at finding the “dip” in your favorite crypto. “Look at your risk tolerance, then set up automatic triggers in your desired exchange accordingly,” @Kissyos tweeted.

Bobby Ong, co-founder of CoinGecko.com, agreed, “During bear markets, it’s very hard to time the pico bottom. If you don’t have any crypto exposure, start with BTC/ETH and dollar-cost your way in.”  

Steer Clear of the Most Volatile Investments

“Once a widespread market downturn commences, the first step to take is to reevaluate current positions and reduce exposure to the most volatile assets,” CoinTelegraph.com advised.

Examine your crypto portfolio and look for projects that don’t seem to have staying power. These investments — from smaller alt-coins to NFTs — may not survive the winter. It’s not too late to cut your losses and minimize risk now.  

Building Wealth

Don’t Risk More Than You Can Afford to Lose

The old adage of never risking more than you can afford to lose holds more relevance than ever in a down market. Krissyos eloquently tweeted, “If you can’t sleep at night feeling safe with your current store of value, you won’t be able to make rational decisions.”

Invest in Yourself

If you find your best course of action is to hold tight until winter turns to spring, take this time to invest in learning more about crypto and NFT investing, experts say. Ong said he will use this time to find new projects that show promise. He tweeted, “If you are a long-term BTC/ETH holder, multi-year market gyrations won’t make any difference, so go spend quality time on yourself, family, and friends. Go for a jog, cycle, hike. Improve yourself technically and socially.”

Consider Doubling Down

See: Is Crypto a Reliable Source of Income for Retired People?
Find: 5 Things Most Americans Don’t Know About Crypto Investing

If you’ve done your research and signs point to an NFT or cryptocurrency doing extremely well in the long term, don’t be afraid to double down on your favorite investments, Fidelity Investments CEO Abigail Johnson said at the Consensus 2022 event in Austin, as reported by Forbes.com. “This is my third crypto winter. There’s been plenty of ups and downs, but I see that as an opportunity.”

Building Wealth

More From GOBankingRates

Share this article:

Building Wealth

About the Author

Dawn Allcot is a full-time freelance writer and content marketing specialist who geeks out about finance, e-commerce, technology, and real estate. Her lengthy list of publishing credits include Bankrate, Lending Tree, and Chase Bank. She is the founder and owner of GeekTravelGuide.net, a travel, technology, and entertainment website. She lives on Long Island, New York, with a veritable menagerie that includes 2 cats, a rambunctious kitten, and three lizards of varying sizes and personalities – plus her two kids and husband. Find her on Twitter, @DawnAllcot.
Learn More