The past few weeks have been brutal for all cryptocurrencies. Even the best projects have crashed. The market capitalization of the sector hit more than $2 trillion (approximately Rs 15,610,304) around March this year, now at $892 billion (about Rs 89,265), according to CoinMarketCap.
At this time, when the global economic situation is facing recession-like circumstances, investors are reducing their appetite for risk. Recently the breakdown of Terra and Celsius The network also causes fear among investors.
Below are the declines of the top crypto assets from their all-time highs (ATHs).
Bitcoin down 70% Ether down 77% BNB down 68% Cardano down 84% Solana down 88% Dogecoin down 92% Polkadot down 87%
So, what are the lessons learned from the most recent crypto crash?
HODL is not a good strategy
HODL (Hold Life Dear) is a popular concept in cryptocurrency investing. That means you should never sell your crypto – especially Bitcoin.
People say that if you buy Bitcoin and then never sell it, you will become very rich!
Bitcoin has grown from almost $69,000 (about Rs 54 lakh) to $21,000 (about Rs 16 lakh) in seven months!
Do you still think HODLing is a good strategy?
While it is not possible to ‘time’ the markets, savvy investors know that all markets have ups and downs and you need to ‘enter’ and ‘exit’ cryptocurrency market by the time.
Buying Dip is not a good strategy
I hate the concept of ‘buy soaking water’. This means that every time the Bitcoin price drops, you should buy more Bitcoins!
This is an extension of HODLing.
It means you believe that the Bitcoin price will continue to rise forever. So every time the price drops, you buy more.
This is a very bad strategy. No asset is constantly increasing in value – not even gold, stocks or real estate.
Now Bitcoin has risen from almost $69,000 (about Rs 54. BTC Last ATH.
You will end up with a big loss. As I said before, it is not possible to ‘buy time’ the market. But savvy investors know that all markets have ups and downs. Therefore, you should never “buy dip” blindly.
Don’t follow influencers blindly
During the bull market, most cryptocurrencies rallied. Even bad projects!
So when social media influencers advise you to buy some crypto and the price actually goes up, you might think they’re super smart. No they do not.
Cryptocurrency is a very complex market. There are no ‘experts’ that always get it right.
Although I’ve advised my community to sell by March 31, 2022, I don’t see Terra crashing.
In fact, I posted about why am I optimistic on Terra! And then Terra crashed and caught fire!
So don’t blindly follow influencers. Always do your own research and remember that even the best projects can collapse and sell out in a bear market.
And when analyzing Cryptocurrency projectsuse the ROHAS method – check the Project’s Revenue, Organization, History, Algorithms and Social Community.
What is next?
I don’t think this is the end of the entire cryptosphere.
Cryptocurrencies will bounce back, but not all cryptocurrencies. Many weak projects and overvalued cryptocurrencies will fail.
There are over 20,000 crypto projects and over 4.5 million crypto assets. I expect 1% of it to bounce back strongly and 99% to fail.
If you are new to cryptocurrency, now is the time to join the airdrop and learn and earn projects. This will get you free crypto and help you learn the basics.
New crypto startups use airdrops as a marketing strategy. They offer free cryptocurrency in exchange for promoting their website and social media accounts. You can get the list of the latest airdrops from sites like coinmarketcap.com and airdropalert.com
Many cryptocurrencies hold mini-courses to raise awareness about their projects. You need to watch a small video and do a little quiz and you will get free crypto.
This is called Learn and Earn. You can also earn free crypto by playing online games (Play to earn) or even by walking (Move to earn).