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Everyone who put money into cryptocurrencies had a lousy year. Big economic problems have hurt Bitcoin and other digital assets a lot. Prices have gone down because of this, and many people who just started using crypto last year have left the market. Looking for a safe crypto trading platform to invest in Bitcoin? Then check out profithorizon.app.
Bitcoin and other digital assets have been decreasing since the end of 2021. This happened after the market went up for a long time, pushing the total value of the global cryptocurrency market past $3 trillion.
Even the biggest fans of cryptocurrencies have had a challenging year this year, but early adopters are used to the high volatility in both directions. But after these booms, there were always terrible busts.
People have also called these stages of decline “crypto winter” stages. As the number of people who use bitcoin grows, those who stick with it should do well.
During the crypto winter, stay in the same place
Even though it may be hard to remember this during the crypto winter, it is essential to remember that many people get rich when the market goes down. This is especially true of crypto, and there are two main reasons.
At the same time, the market shifts its focus from price action, promotions, and excitement to the growth of products and businesses. During a bear market, cryptocurrency projects like Solana, Cosmos, and Uniswap were able to come up with and launch new, creative ideas. Ethereum is the second most-used form of digital currency in the world. It was made in 2015 when Bitcoin was in a bear market.
Before the 2017 bull market, each Ethereum token was worth less than $10. The price of Ethereum hit its all-time high of $1,430 in January 2018, the last month of the cycle. People who initially put money into this made a lot of money.
Investors who stayed strong during the bad market of 2014–2016 were some of the most successful in 2017. In the same way, many people who were successful in 2021 didn’t give up when the economy was terrible in 2018, 2019, and 2020. When the market starts to turn around, the most important thing to do to succeed is to be patient.
Evaluate your argument once again
When the value of an asset or asset class falls by 70% from its all-time high, it could mean a lot of different things. A big drop in an investor’s portfolio, for instance, could mean that the market doesn’t agree with their investment thesis.
This could mean the investor needs to change their strategy and rebuild their portfolio to fit the new situation. This could be necessary for the investor’s portfolio to accurately reflect the new situation. If this is the case, you might be better off selling the asset at a loss and using the money for something else.
On the other hand, a significant drawdown does not always mean that an investor’s investment thesis is wrong. When the price of an asset goes down, that doesn’t always mean it’s a bad investment. A drop in the value of an asset can be caused by a lot of different things, many of which have nothing to do with the asset itself or its fundamentals.
“Second-order logic” is what you need to use
Each new bull cycle in the cryptocurrency market is caused by a different set of events and is accompanied by a different set of stories. The last bull run began when the price of Bitcoin dropped by half in 2020. This happened at the same time that a lot of money was being made after the pandemic.
People saw that buying Bitcoin was the best way to protect themselves from inflation. A lot of food-related decentralized apps were made on Ethereum during what became known as “DeFi summer.” So, the circle didn’t change. The following year, there were a lot of NFTs in the mainstream, which is how the term “NFT summer” came to be used.
Just be patient
Waiting is essential during the crypto winter. Winter often lasts much longer than expected, which can be hard on even the most devoted believers. Since the Great Financial Crisis, the macro economy has been in the worst shape it has ever been.
These dire conditions led to the start of the current bear market. It’s possible that the prices of cryptocurrencies will continue to go down or stay about the same over the next two to three years. People who don’t trade often might find it easy, but people with a lot of money in cryptocurrencies might find it very hard.
It’s all about having patience
Trying to invest in cryptocurrencies and get through bear markets helps to have a mental model that says you should only make assets that are likely to go up in value. In this case, the expected value (EV) is the total of all the possible outcomes of a random variable, with the value of each outcome multiplied by the chance that it will happen.
