How to minimize your losses and even make smart moves during a falling market

Oct 8
Even within bigger, continuous trends known as bull and bear markets, the Bitcoin and cryptocurrency markets have gone through numerous up-and-down cycles since their launch in 2009. Although every market downturn so far has been followed by a recovery and large returns, downturns can still be stressful and challenging for both seasoned traders and novice investors.
To maintain the value of your portfolio and stay away from irrational trading during market downturns, you should adhere to the following five tactics:
#1: Don't fall prey to FOMO and FUD.
The most recent news and trends in the bitcoin industry must be kept up with, but too much information can be hazardous. This is particularly true during market turbulence when it is all too easy to give in to your emotions and do a few trades at the wrong times.
The terms "Fear of Missing Out" (FOMO) and "Fear, Uncertainty, and Doubt," or "FUD," are frequently used in the cryptocurrency industry and can influence our buying and selling decisions more than many of us would want to admit.

FUD is a term used to describe the bad market attitude that results from a rumor, adverse news story, or a well-known individual expressing worry about a specific market or asset. As traders sell their assets in anticipation of additional market decreases, this could lower the price.

The reverse, known as FOMO, is a trader's propensity to indulge in wishful thinking after observing favorable market action or news, occasionally omitting basic signs.

#2: Set clear goals, diversify, and trade within your means.
You should never invest more money than you can afford to lose, regardless of how sure you are about a certain item. Nobody wants to experience the emotional ups and downs of watching for favorable price activity while their portfolio's value gradually declines.
To diversify their portfolio, the majority of shrewd investors also decide to hold a variety of assets over the long term, from alternative cryptocurrencies to stock market index funds.

#3: Holding and Long-Term Thinking
Unrealized losses, which occur when an asset's value has decreased after you purchased it, can only be recovered when the asset is sold for less than you paid for it.
Long-term trends for Bitcoin have been continuously upward over the years. History demonstrates that prices will likely eventually rise as a result of economic causes like shortages, even if prices decline as a result of a brief market correction or a protracted bear market.

Many individuals think that the scarcity of cryptocurrencies like Bitcoin will lead to long-term price increases, and negative price movement can be viewed as transient if your investment horizon is longer.

#4: Be prepared to ride out the drop or take profits.
Converting some of your risky crypto assets into more stable assets is one of the safest strategies to prevent cryptocurrency volatility and protect yourself during market falls. In a bull market for cryptocurrencies, this can assist an investor in "locking in" their balance, lowering risk, and lessening the stress associated with actively managing their portfolio.
By turning a portion of your portfolio into stable-value assets, such as stablecoins like USDC, you limit your exposure to price changes during periods of calm market activity. It's crucial to keep in mind that capitulation, or selling everything at once, can easily result in cryptocurrency investors losing out if the market unexpectedly recovers. The level of profit and loss that you are comfortable with should be established before you are forced to make judgments quickly.

#5: See opportunities
If you know where to look, there are possibilities even when bitcoin markets are down. Interested investors see a new window of opportunity to purchase their preferred assets at a discount and profit when others anticipate a cold and gloomy crypto winter.
For investors who feel they were left out of earlier gains, "buying the dip" is a common strategy for entering the market or expanding an existing stake.
There will still be little peaks and valleys as the market fluctuates, even during a decline. Technical analysts can profit from this situation by using their knowledge to forecast these short-term movements and profit from them by buying the lows and selling the highs.

During downturns, short selling, or betting on the value of an asset to decline, can also be a successful tactic for making money. Even in a down market or downtrend, activities like staking and DeFi yield harvesting can help balance returns and offer support so that your actual Bitcoin balance is constantly increasing.
Dollar-cost averaging is effective regardless of whether markets are rising or dropping if you think an asset will someday be worth more! During downturns, you can exchange more dollars for cryptocurrencies.

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