What to do when the market crashes
The crypto markets are incredibly volatile.. as I’m sure you’ve noticed by now.
The massive price fluctuations can trigger a plethora of emotions; from the highest highs to the lowest lows.
If you’re in this market for long enough, you’re going to have days where your portfolio takes a massive hit.
Next time that happens..
Don’t throw your computer, and don’t punch any walls..
Don’t random start yelling at the clerk at 7 eleven either.
Remain calm, if you can.. because it’s all part of the journey.
Here are a few tips that will help you deal with the next crash (assuming you don’t get ahead of the move and open a short position).
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Don’t look at your balance
Since I started keeping my coins in multiple locations, I stopped checking my balance every day.
If the market has been trending upwards for a while, I may check a few of my addresses on etherscan and tally up the balances, but if not.. I don’t bother.
I’ve learned that it just puts me in a bad mood and it’s completely unnecessary.
Within my little circle of crypto-friends and associates, I’m one of the only people who doesn’t have a portfolio value tracker installed on my phone. I just don’t see the need.
Using an invasive app (which requires access to personal info on my phone), to track my crypto-holdings doesn’t seem like a great idea.
Maybe I’m just paranoid. Either way, it’s not my thing.
Try uninstalling those apps and see how you feel.
2. Only invest in projects with strong fundamentals
If your investment strategy involves chasing shit-coin pumps, and if the market turns against you.. you may find yourself holding coins attributed to projects you don’t understand.
Trust me, it’s a lot more reassuring to be invested in VeChain, for example, knowing they’ve secured partnerships with multiple, multi-billion dollar companies.. than it is to be holding “dogelon mars” (or equivalent).
The more confident you are in the long term viability of the projects you buy into.. the easier it’ll be to handle the price drops.
You won’t panic sell, and if anything.. you’ll seize the opportunity and buy more to add to your stack.
3. Don’t invest money you need for day to day expenses
Ensure that you’re diversified and always keep some fiat on the sidelines. In other words, don’t put your rent or grocery money into cryptos.
The long term trend is up, sure.. but when these downturns happen, it’ll be hard to deal with emotionally if you’re invested with money that you NEED for your day to day expenses.
When you’re tied to your investment emotionally, that’ll lead to emotional buy/sell decisions and typically, that doesn’t work out well.
Emotional traders are the ones who panic sell the lows, then FOMO buy the highs. Just relax.
4. Reflect on what you could have done differently
It may not seem like it at the time, but every crash is a learning experience.
It’s also a great opportunity if you know what you’re doing.
What most newbies don’t realize is that those big red candles mean massive profits to some traders.
Market newcomers tend to be perma-bulls, always on the long side of the trade.
Well, markets tend to crash a lot quicker than they rise, and if you know when (and how) to move to the short side, you can build your bitcoin balance while the masses are all panicking and making doom and gloom posts in Facebook groups.
If you don’t yet know how to short bitcoin and other cryptocurrencies, then just read that hyperlinked article.
In short (no pun intended).. to do so successfully, you’ll need to learn how to identify when those green candles are topping out and time the trend reversal.
Traders use multiple indicators for this..
– Bearish candles (topping candles and doji’s)
– Oversold ranges (30 and below) and bearish divergences on the RSI
– Levels of resistance (trend lines, fib extensions, moving averages etc.)
– Price action (when the price starts to make lower highs and lower lows)
Spend some time reading through our trading tutorials so you’ll know exactly what to look for.
5. Remember why you’re in this to begin with
*this was the image caption: When you understand the threat to humanity that centralized entities pose, believing in tech that enables decentralization becomes much easier.
Do you believe in the technology?
For me, personally.. I think decentralization, particularly when it comes to the financial system, is a boon for humanity.
Blockchain technology is a tool that can (and should) be used to strip power from the war-mongering psychopaths who are positioned atop the pyramid of control and restore it back to the people.
It’s something I strongly believe in.
If I adopted the herd mentality and panic sold every time the masses did, what does that do for the longevity and public perception of cryptocurrencies as a whole?
We, the people.. now have the opportunity to liberate not only ourselves, but future generations as well.
I don’t want my kids being born into debt-servitude; being told they owe money to parasitic bankers for “interest” on debt they didn’t incur themselves.
Actually, they won’t be told that, nobody is. The truth is sugar coated, but it’s the truth nonetheless.. and it needs to end.
Luckily, with the advent of blockchain technology, these centralized entities can be rendered obsolete.
No need for an uprising. No need for violent confrontations. This can be the most peaceful revolution in history.
We now have the tool to make decentralization a reality, but it’s up to us to use it.