Key Takeaways
- Bear markets are where the money is made, so sticking around and staying engaged is crucial for success in crypto.
- Second-order thinking and expected value are two instrumental mental models to use when preparing for the next leg up.
- Bear markets could last years, and crypto asset prices could go lower than everyone’s expectations, so staying patient is essential for surviving the crypto winter.
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It’s been a brutal year for crypto investors. After an extended market rally saw the global cryptocurrency market capitalization top $3 trillion in late 2021, Bitcoin and other digital assets have been battered by macroeconomic turmoil, suffering a decline that’s sent many of last year’s new crypto adopters running for the exit. Today the space is worth just under $1 trillion, with Bitcoin and Ethereum both trading over 70% down from their all-time highs.
But while this year has tested even the most ardent crypto believers, early adopters have become used to extreme volatility in both directions. Crypto has historically boomed roughly every four years as new entrants discover the technology and hype builds, but it’s always suffered from severe crashes after the market euphoria hits a peak. These downturns have become known as “crypto winter” phases, characterized by significant declines in market activity and interest, project washouts, and extreme selloffs. Although few crypto fans welcome bear markets, they can provide an excellent opportunity to recuperate and take stock ahead of the next market cycle. In this feature, we share our top five tips for surviving the ongoing crypto winter. Those who follow them should be well-positioned to thrive once crypto finds momentum.
Stick Around Through Crypto Winter
While crypto winter can be challenging, it’s important to remember that bear markets are actually where many people build true wealth. This is especially true in crypto for two reasons.
One, projects that lack fundamentals, product-market fit, or are outright scams, get washed out during bear markets. At the same time, the space turns its focus from price action, marketing, and hype to product and business development. Some of the leading crypto projects today, such as Solana, Cosmos, and Uniswap, were built and launched during bear markets. Ethereum, the world’s second-largest cryptocurrency, launched in the middle of the Bitcoin bear market in 2015 and traded below $10 until the 2017 bull cycle….
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