The ongoing bloodbath in the crypto industry has got even the maximalists worried. The prolonging of the crypto crash is hurting retail investors severely. The crypto market is witnessing a freefall with Bitcoin falling below $25,000, creating a new low. The present condition is discouraging new investors to put their money in crypto. Retail investors are hesitant to add new positions. The Fear & Green Index shows extreme fear in the crypto market. Amid the increasing uncertainty in the crypto market, preserving the capital should be your priority. As an investor, you can do certain things to preserve your crypto portfolio amidst the bloodbath.
What To Expect?
Bitcoin is sitting at a critical juncture with the current market price at around $24,000. A plunger below this level can send the price crashing to around $22,800 which is the next support zone. Whether we will see a reversal from there is difficult to say. If the price of $BTC breaches the $20,000-mark, another critical support zone, the bloodbath may intensify.
Source: TradingView
The market price of some high-volume projects like Cardano ($ADA) has been down by nearly 50% since 2021. The crypto market cap has dropped below $1 trillion for the first time in over a year, reversing the gains made in 2021. The ongoing global economic slowdown is contributing to the crypto bloodbath. Inflation in the US is at a 40-year high. While analysts remain bullish in the long term, it is extremely difficult to spot the dip. Traders and Investors need to be extremely cautious. Instead of making decisions based on emotions or market sentiment, it is important to spot bottom signals to make significant gains at the time of recovery.
Source: Coin Market Cap
How To Preserve Your Portfolio Amidst The Crypto Bloodbath
The priority of every investor amid a crypto crash must be to prevent their portfolio from getting rekt. Preserving the funds is key to solid gains. Here are a few things you can do to preserve your portfolio amidst the crypto bloodbath:
- Avoid Panic Buying: Panic selling and panic buying are never good. We have had 9 consecutive red weekly candles for $BTC. The market sentiment is clearly bearish. But, the accumulation zone could be around the corner. However, you should avoid jumping on trades in haste. Minor uptrends could be a trap for the longs before we hit rock bottom. Therefore, waiting for a retest would be a wise thing to do. That is how seasoned investors approach a trade. Hence, avoiding panic buying is extremely important to preserve your crypto portfolio amidst the bloodbath.
- Cut Positions To Minimize Losses: Yes selling in loss is unadvisable but these are extraordinary times. We are witnessing red candles week after week. If your stop-loss hit, good! But if not, it is wise to cut the active positions to minimize the loss. It is the time to preserve funds. You can always make gains later if you have funds in your hands. The ongoing crypto crash is also a reminder of why you must always have a stop loss in place.
- Observe The Movement Of Large Caps: There are more than 18,000 cryptocurrencies in circulation. A major chunk of these crypto tokens are unlikely to survive the ongoing crash, say analysts. So how do how ascertain which way the market is going to move? The best way to do so is by tracking the movement of large caps like Bitcoin and Ethereum. Bitcoin’s price movement dominates the overall market sentiment. Hence, it is extremely important to track the movement of $BTC to preserve your crypto portfolio amidst the bloodbath.
- Diversify Position Building: Instead of going all-in once a dip occurs, you should build positions slowly by putting in a fraction of funds at different price levels. It is extremely difficult to track the bottom in the present scenario. Hence, building positions slowly is the only way to counter the impact of the crash. Moreover, you need to diversify your investment into multiple large-cap tokens instead of investing in a single token. Even if some tokens fail to recover, your overall position will still be in profit.
- Develop A Long-Term Strategy: In order to mitigate the risks of the ongoing bloodbath, you need to develop a solid understanding of the crypto market. It is important to decode the reasons behind the prolonging of the crash. This way, you can get an idea of the market recovery by studying the factors affecting the crypto market. To minimize the impact of such crashes and keep your portfolio growing. Yes, crypto gives the opportunity to make exponential gains but it is a high-risk high-reward game. Thus, you should focus on building a fortune slowly instead of becoming a millionaire overnight.
Conclusion
The ongoing crypto crash has certainly affected the developments made in 2021. The growth of countries like El Salvador, which aggressively adopted the use of cryptocurrencies, has been left in jeopardy. Retail investors, that are largely in crypto for financial freedom, are also uncertain about the future. Therefore, it is extremely important to understand the market sentiment. Demystifying the factors fueling the crash is even more important. In the long run, only a solid strategy and mindful investment can help you preserve your crypto portfolio amidst the bloodbath.