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Crypto winter is the best time to cultivate your portfolio

Well, it’s winter again. No, it’s not snowing outside, and temperatures are actually getting warmer (in the northern hemisphere, at least). However, none of this could prevent the next cycle of crypto highs and lows that led us to the crypto winter of 2022. It’s no shocking surprise, however.

Photo by Aaron Burden on Unsplash

Various articles have been speculating about the topic for half a year as soon as the crypto prices started to falter. Now that it’s here, speculation revolves around why it happened (various reasons) and how long it will last (probably “a while”).

But before anyone panics and hits the road, it might be important to put yourself in perspective, consider the similarities (and differences) of similar cycles, and make a decision about what to do next. So put on your thick coat, boots and some gloves and let’s dive in.

Hello, first time here?

The first thing to realize is that none of this is new. In many ways, it’s not even new. If you analyze cryptocurrency price trends in general, you can see a four-stage cycle (as shown on this tweet), which can be categorized into take-off, first-sell-off, fake-top, and cycle-top categories. The trend cycle varies in length, but impresses with its regularity. A key difference is that each cycle continues to increase in size, meaning that final dive starts much higher and therefore loses a lot more as it falls.

Many crypto veterans have dark tales to tell about the terror of crypto winter 2018. For two years he stifled many innovations in the crypto industry. Though many weaker platforms shut down, many of those strong enough to survive gained prominence as the 2020/2021 thaw warmed the market. For those who stayed with them over the winter, the result was a spectacular increase in value.

While some surrounding elements of this winter are different, many key elements are likely to be the same: the market is cooling off, these weaker platforms are likely to collapse, and the stronger platforms are likely to benefit greatly in 1-2 years as they emerge from the winter storm stronger than ever before and with a real war (economic) history to give them credibility.

So what is the difference between this crypto winter and the last one? First of all, a world-changing pandemic that is still present in our lives has irrevocably changed the world. On the other hand, for the first time since the Second World War, a war is taking place on the European mainland. Other factors, or perhaps the result of the pandemic and war, have many interesting implications for inflation, scarcity, prices, and everyday life. How do these affect crypto? It’s difficult, if not impossible, to say for sure, other than that total wealth is shrinking and the average person is more concerned about preparing their monthly budget than they were a year ago.

While even less different than the crypto winter of 2018, it never hurts to look back at the dot-com bust of 2000. We can’t exactly follow the lines and apply them to today, but there are still some very important lessons and insights. The main lessons learned from the bursting of this bubble were:

  • Bad ideas that deserved investment just because they were a website went bust
  • Good ideas caught in the bursting bubble would likely thrive if they could weather the storm
  • Those heavily invested in the bad ideas lost money
  • Those who invested in the good ideas did very, very well

what can be done

So where is the filter that allows us to see which platforms have “good ideas”? Unfortunately it doesn’t exist. However, there are two key strategies that can help you not only survive, but thrive through the winter. Before we discuss the strategies, however, this is a gentle reminder that we all need to make our own decisions based on our circumstances, risk-reward balance, and many other individual factors.

The first strategy is to find a tool that will quickly notify you of changes in your individual token investments, provide key data and statistics, and provide the ability to take quick action to adjust your portfolio. One of the leaders in this space is CoinStats, which despite the winter is still receiving large rounds of funding from enthusiastic investors. The platform is a portfolio management platform that can track every crypto asset you have, provides notifications based on your preferences, enables fast exchanges, provides live prices for coins and offers what is considered the best portfolio Tool of all: actionable intelligence. This is key information presented in a way that fits your risk/reward appetite and offers the opportunity to take quick action based on the data collected. It has been praised for its user-friendly interface (important when actionable information is required) and has specialized tools such as customizable metrics, alerts, and heatmaps. Employing a strategic portfolio manager is vital for both bull and bear markets, but can be even more important for the bear side of management due to the need to make quick decisions when you need to swap or close a position.

The second strategy is less math and more common sense. Like the dot-com bust, ideas that really don’t make sense in the cold light of day should not be invested regardless of the hype. There are many different crypto platforms today that have amazing ideas. They’re not overly inflated just because they’re a crypto offering. The crypto – or rather, the unique capabilities of Web3 and blockchain – increases its value and enables it to achieve things it could not do on its own. Items that create higher security, benefit heavily from decentralization, have a thriving DAO community, or rely heavily on a trusted and immutable data source are all potentials for great projects that have a good chance of being successful in any market. These are the platforms to identify, research thoroughly, and possibly join.

Looking ahead to next spring

These strategies can go a long way in better balancing, sorting, and maintaining a healthy portfolio. With market-focused analysis tools and the ability to research platforms with strong utility, you can work to strengthen and possibly weatherproof your crypto portfolio.

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