Crypto Winter Is The Best Time To Cultivate Your Portfolio

Various articles have been speculating on the topic for half a year, as soon as crypto prices started faltering.  Now that it’s here, the speculation is about why it has happened (a variety of reasons), and how long it will last (probably “a while”).

But before anyone panics and takes to the streets, perhaps it’s important to gain some perspective, look at the similarities (and differences) of similar cycles, and to come up with a decision on what you may want to do next.  So put on your heavy coat, your boots, and some gloves, and let’s dive in.

Hi, First Time Here?

The first thing to realize is that none of this is new.  In many ways it isn’t even novel.  When you analyze the trends of cryptocurrency prices in general, you can see a four-step cycle (as seen on this tweet)  that can be categorized as “take-off”, “first-sell-off”, “fake top”, and “cycle top”.  The trend cycle differs in length, but is impressive in its regularity.  One key difference is that the magnitude of each cycle continues to grow, meaning that this latest dive starts much higher and therefore loses a lot more when it falls.

Many crypto veterans can tell dark tales regaling the terror that was the Crypto Winter of 2018.  Lasting two years, it stifled a good deal of innovation in the crypto industry.  However, though many weaker platforms shut down, many of those that were strong enough to survive rose to prominence once the thaw of 2020/2021 warmed up the market.  For those who had stuck with them during the winter, the outcome was a spectacular rise in value.

While some surrounding elements of this winter are different, many key items are likely the same:  the market is cooling, those weaker platforms will likely fold, and the stronger platforms will likely benefit strongly in 1-2 years, coming out of the winter storm stronger than ever, and with a genuine (economic) war story giving them bonafides.

So what is different between this crypto winter and the last one?  For starters, a world-changing pandemic that is still present in our lives has irrevocably changed the world.  For another, a war happening in mainland Europe is happening for the first time since WWII.  Other factors, or maybe the result of the pandemic and war, are doing a lot of interesting things to inflation, shortages, prices, and everyday life.  How do these affect crypto?  It’s difficult, if not impossible to say for sure, other than to say that overall wealth is contracting and the average person is more concerned about making 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 Dotcom bust of 2000.  We can’t follow the lines exactly and apply them to today, but there are some very important lessons and insights all the same.  The key lessons from that bubble bursting were that:

• Bad ideas that had earned investment just because they were a website were going bust
• Good ideas that had been caught in the bubble burst would likely thrive if they could hold out the storm
• Those that were heavily invested in the bad ideas lost money
• Those that invested in the good ideas did very, very well

What Can Be Done?

So where is the filter that we can use to see which platforms have “good ideas”?  Sadly, it doesn’t exist.  That said, there are two key strategies that could help you not only survive, but thrive through winter.  Before we discuss the strategies however, this is a gentle reminder that we all have 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 can help inform you quickly of any changes to your individual token investments, provide key data and statistics, and offer the ability to take quick actions to adjust your portfolio.  One of the top leaders in this field is CoinStats, which despite the winter is still receiving heavy rounds of funding from excited investors.  The platform is a portfolio management platform that can track any crypto asset you have, provides notifications based on your preferences, allows for quick swaps, provides live pricing of coins, and offers what is considered to be the best portfolio tool of all:  actionable intelligence.  This is key information, presented in a way that matches your risk/reward appetite and can provide the ability to take quick actions depending on the data collected.  It has been applauded for its user-friendly interface (key when actionable intelligence is required), and has specialty tools such as customizable metrics, alerts, and heatmaps.  Using a strategic portfolio manager is critical for both bull and bear markets, but may be that much more critical for the bear side of management, as quick decisions have to be made if you need to swap or exit a position.

The second strategy is less mathematics and more common sense.  Like the Dotcom bust, ideas that really don’t make sense in the cold light of day should not be invested in, regardless of hype.  There are many different crypto platforms available today that have amazing ideas.  They are not overly inflated simply because they are a crypto offering.  The crypto—or rather, the unique abilities of Web3 and blockchain—enhances its value and allows it to accomplish things it couldn’t do on its own.  Elements that create higher security, benefit greatly from decentralization, have a thriving community DAO, or rely heavily on a trustless and immutable source of data, are all potentials for great projects that have a good chance of thriving through any market.  These are the platforms to identify, to heavily research, and possibly, to join.

Looking to Next Spring

These strategies can help greatly to better balance, weed out, and cultivate a healthy portfolio.  With market-driven analysis tools, and the ability to research platforms with a strong utility, you can work to bolster and possibly weatherproof your crypto portfolio.