How do you deal with emotion and stress during a cryptocurrency market crash?
Unlike traditional asset markets, cryptocurrency trading is active 24/7. On top of that, the coins are highly volatile, which can often lead to significant losses for traders and investors. In fact, this is the reason why the latter are constantly monitoring Bitcoin chart movements and altcoin prices. Sometimes this hobby can turn into a full-time, stressful job. And to avoid damage to your health, you need to fight your attachment to crypto and control your emotions. Here’s how to do it.
How not to go crazy with cryptocurrencies?
When a person keeps “playing” with cryptocurrencies despite losing sleep, appetite or even money, he or she shows the first symptoms of addiction. He or she does not understand the need to stop, with the uncontrollable desire to constantly monitor market movements and keep up to date with cryptocurrency news that can hurt and in addition increase losses.
Crypto addiction – not cool
According to Cointelegraph sources, cryptocurrencies themselves are not addictive – it’s all about the processes in our brains. Since a trader can open their crypto portfolio and access related content at any time, trading is able to become a kind of “drug” or a way for them to find new positive emotions.
To end crypto addiction and the stress and depression associated with it, experts recommend removing crypto apps and distancing oneself, at least temporarily, from any news about digital currencies. You should also limit the amount of money you invest in crypto and stop considering risky transactions as your main source of income. If you want to continue learning about the crypto market in a way that is good for you and your wallet, it is a good idea to have a “detox” period from time to time.
The most important step in letting go of the influence of emotions is to ask yourself how buying cryptocurrencies fits into a trader’s overall financial plan, and if they have one at all. Is the coin enthusiast aware of the volatility of the crypto market and the risks associated with investing in digital currencies? If these questions are not answered accurately, it will be very easy to lose money in crypto.
Cryptotrader
That's why experts recommend focusing on learning about the industry and developing a clear trading plan. It's about basic market concepts, technical fundamentals of different blockchains, risk management strategies and so on. The more rigorous the plan, the less emotion there will be. Accordingly, the greater the chances of at least not losing out on crypto.
It should be noted that there was a bit more reason to be less worried about the cryptocurrency market the day before. Still, experts at analytics platform Glassnode believe the bottom for the main cryptocurrency’s price is very close. So far, the realized price of BTC has been almost a month below the market price, but now the market is showing more signs of an imminent reversal. However, don’t count on a full-blown bull run after all.
When will Bitcoin start to rise?
Until recently, Bitcoin has been trading in a channel between the $17,600 and $21,800 levels. At the same time, the amount of unrealised losses of holders of the coin reached $198 billion, which is about 55 per cent of its capitalisation.
Dynamics of crypto investors’ unrealised losses
Fortunately, the day before, the total market capitalisation rose above a trillion dollars for the first time in weeks. Bitcoin also enjoyed growth: it rose above $24,000 yesterday, but later corrected slightly due to activity by Tesla, which sold most of its coins.
Number of days when the market price of BTC was below its realised price
But there is some bad news: according to CryptoSlate, the average duration of a bearish trend is almost 197 days. Earlier, Grayscale Investment experts said that the current bearish trend started almost a month ago, which means the “cryptozyme” could last until March 2023. In other words, we should not expect a global bull run in the coming months, experts say.
Importantly, they make this prediction because of previous bearish trends in the coin market and their duration. However, previous experience does not guarantee a repeat of the situation in the future, so this should only be treated as one of the possible versions.
Note that the small market rebound has not helped SkyBridge Capital, a firm founded by former White House communications director Anthony Scaramucci. The day before, it suspended the withdrawal of one of its funds called Legion Strategies, which has assets in crypto. The decision was allegedly taken due to a serious drop in prices in the stock and cryptocurrency markets.
According to insiders, Legion Strategies’ portfolio now consists of 20 per cent of shares in private companies, which are quite difficult to sell. Most interestingly, this includes a stake in cryptocurrency exchange FTX. And while in February this year 24 per cent of the fund’s portfolio consisted of cryptocurrencies, by today their share has dropped to 10 per cent.
SkyBridge Capital head Anthony Scaramucci
There have been no other significant announcements from SkyBridge Capital yet. It is assumed that investors’ funds are fine and the event will not cause any serious losses for clients. However, the suspension of withdrawals itself is a wake-up call that many crypto firms that have declared bankruptcy to date have had before.
We believe that the key to peace of mind when dealing with crypto is first and foremost to refrain from investing more than an investor is willing to lose. Still, as the LUNA story showed, anything can happen in crypto. So, you have to be prepared for that.
Look for even more useful information in our millionaires’ cryptochat. We will discuss other important news there as well.
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