5 Proven Tips to Protect Your Money During a Crypto Crash (2024)

Many of us believe investing in cryptocurrency is magical until we encounter a crypto crash that could become a nightmare in a lack of hawk-eye planning.

Contents

Cryptocurrencies: The Past and PresentWhy is Crypto the Choice of New-age Investment?What Should You Do NowInvest What You Are Ready to LoseBook Your Principal Amount and Stay Invested in the ProfitsDiversify Your PortfolioKeep Your Crypto in Non-Custodial WalletUnderstand the Crypto Rotation CycleConclusion: Surviving the Crypto Crash

A crypto crash is often referred to as a down fall in the crypto market that marks the beginning of a crypto bear market season.

There is a famous saying “What goes up, must come down” by mathematician Isaac Newton. Initially, it meant that gravity pulled every and anything back to earth. The saying holds true for the crypto market although with much greater forces.

Cryptocurrencies: The Past and Present

In its starting days, 2009 precisely, Bitcoin (BTC) was the only traded cryptocurrency. With a delay of almost 2 years, two new cryptos, Litecoin, and Namecoin joined the wagon. The second largest crypto as per its market share, Ethereum (ETH) came into existence in 2015. As per the latest records dated March 2022, more than 9000 cryptocurrencies are trading in the decentralized marketplace.

Why is Crypto the Choice of New-age Investment?

Most of the talks about cryptocurrency are BTC based and rightly so, as it is the flag bearer. The price journey of BTC is captivating. From trading at a minuscule value of $0.01 in 2010 to an all-time high (ATH) price of $69,500 in November 2021; it remains the highest-paying asset class ever.

Looking for a wallet that would keep all your investments safe during any unethical events? Here are some of the top cryptocurrency cold wallets to explore.

Predicting the reversal of any bear market is nearly impossible. Yet, smart investors understand that this dip is an excellent chance to build their crypto portfolio as the fall is in response to legit geopolitical and social causes. The major reasons for the 2021-22 crypto crash are:

  • A bankruptcy filing by crypto exchange FTX, forced liquidation of Three Arrows Capital on a loan default, and withdrawal freeze by Celsius Network
  • Solana hack
  • Announcement of plans for stringent governance of cryptocurrencies by many nations
  • Rising inflation concerns and Federal Reserve’s interest rates tightening
  • Investing through leveraging, resulting in panic selling
5 Proven Tips to Protect Your Money During a Crypto Crash (1)

What Should You Do Now

High-interest paying schemes come with high risks. While the crypto market is still in its nascent stages, the stock market is well-established and a witness to the same. Despite a significant fall, BTC is yielding a smoking return of 196.7% since its inception (10-year CAGR).

Undoubtedly, long-term investments in the cryptocurrency have yielded bumper returns. But the returns need monetization timely before every gain turns into dust. Considering the volatility and susceptibility of the crypto market, here are 5 proven tips to protect your money during a crypto crash:

Are you confused on how to check your ethereum transaction on explorers? worry not as this article would guide you through in a hassle-free way.

Invest What You Are Ready to Lose

To date, long-term investments in both, stock markets and cryptocurrency have proved to be beneficial. However, returns depend upon many factors such as the quality of the cryptocurrency, your entry timing, geopolitical events, etc.One bad investment is capable of wiping out all your previous gains.

As with stock markets, the cardinal crypto investing or trading rule remains the same. Always put the money you can afford to lose in the worst-case scenario. As a novice investor, you can start small or invest systematically in place of lump sum deposits.

#Bitcoin now 💪 pic.twitter.com/D5ufOM16gq

— CoinMarketCap (@CoinMarketCap) February 19, 2024

A tweet showing BTC pump after years of crypto crash.

Factors such as fear of missing out (FOMO) on the price action, often force investors to buy crypto at higher valuations. This leads to massive losses during the reversal of the buy-sell cycle. As an investor, stay in control of your greed and carry out a thorough analysis before investing in cryptos to get a fair price.

Book Your Principal Amount and Stay Invested in the Profits

This is the method I prefer to follow with my portfolio. Once, I’m sitting on handsome profits, I withdraw my principal amount and stay invested in the profits earned.This approach provides me with 2 primary benefits. One, I’m officially investing risk-free. Secondly, I possess a sufficient amount to re-invest, in case the need arises.

Another proven strategy to conserve your investments is averaging out during the dips (Crypto crash). If you have successfully fought the FUD (fear, uncertainty, and doubt) during the crypto crash and did not participate in the panic selling, dips (Crypto crash) allow you to average at attractive valuations. But remember, averaging out turns out profitable for blue-chip currencies only.

Are you aware of crypto market manipulation? be vigilant and keep note of all the factors listed in this article to stay away for these traps.

Diversify Your Portfolio

Except for monumental volatile intraday movements, crypto markets follow many principles of the stock market. So, never risk your everything for the success of one venture. Evenly distribute your principal amount in significant- and mid-cap currencies and practice portfolio rebalancing as and when needed.

During a bear market, avoid investing in low caps owing to the lack of liquidity and trading exchanges and their extremely volatile nature.

Keep Your Crypto in Non-Custodial Wallet

Investing after due diligence always pays better returns. As mentioned earlier, cryptocurrency trading is still in the nascent stages and retail users need to be made aware of its key features. One of the key concepts is custodial and non-custodial wallets.

Explore a variety of custodial and non-custodial wallets to store your hard earned crypto tokens with this curated article.

To keep your money better protected from scams and freezes, always choose a non-custodial wallet. Although they come with their risks, they give users complete control through private keys.

Understand the Crypto Rotation Cycle

Crypto rotation is as real as sector rotation in stock markets. Not all coins can outperform others all the time. Usually, the currencies in the limelight for a period undergo profit booking or consolidation before the next round of bull run.

To protect your money, you should understand these rotations and take a timely exit after the considerable bull run. You can re-invest in other promising coins based on high volumes or positive news flows.

Have you hear of a crypto bull market? Here is a summarized article that explains the prime difference between and crypto bull and bear market.

Another defining event in the crypto market is BTC halving. After every 210,000 BTC mined (roughly every 4 years) its mining rate is cut in half. Previous halving events in 2013, -17, and -21 marked major bull runs. Although this occurrence isn’t stone-marked, there remains a possibility. Such events provide investment opportunities to new as well as re-entrants.

5 Proven Tips to Protect Your Money During a Crypto Crash (2)

Conclusion: Surviving the Crypto Crash

Each bull run in a crypto market leads to a bear market (Crypto crash chart) and vice-versa. As history proves, reliable cryptocurrencies have bounced back stronger after every fall. Investing in them comes with its own set of risks. But, learning the foundation of the trade and implementing the risk-management strategies serve lucrative returns in the long run. Follow the rules strictly during your investment journey to reap unprecedented benefits.

Similarly, a crypto flash crash is as important as a regular crypto crash, understand the difference with this beautifully crafted article.

Risk Disclaimer: Cryptocurrencies investments are subject to market risks, please consult your financial advisor before investing.

5 Proven Tips to Protect Your Money During a Crypto Crash (2024)

FAQs

What to buy during crypto crash? ›

We list the 5 best crypto to buy that can deliver outsized returns once the market starts its bull run.
  • Pepe (PEPE) Today's crypto crash provides yet another opportunity for investors to buy Pepe on the cheap. ...
  • Pepe Unchained (PEPU) ...
  • Brett (BRETT) ...
  • Base Dawgz (DAWGZ) ...
  • XRP (XRP)
1 day ago

Should I pull my money out of crypto? ›

You might want to sell your crypto under some specific circ*mstances. If there is a lack of blockchain development progress or a string of negative news, you might want to sell your cryptocurrency. If you've reached your investing goals or want to reallocate your holding, you might want to sell your cryptocurrency.

What is the best protection for crypto? ›

The best way to protect your bitcoins and other digital assets from being stolen is to keep your private keys stored in a cold wallet. Cold wallets are not connected to the internet or even another device.

How do you make money when crypto is falling? ›

Short selling, or betting that an asset's value will fall, is also a strategy to potentially turn a profit during dips. Activities like staking and DeFi yield farming can further help level out returns and provide support to make sure your actual crypto balance is always growing, even in a bear market or downtrend.

Which crypto has 1000x potential? ›

Top of our 1000x potential list is Pepe Unchained. Pepe Unchained ($PEPU) introduces Pepe, the iconic meme avatar, on its own blockchain. Built on Ethereum's layer-two (L2) blockchain, Pepe Unchained offers unprecedented speed, low transaction costs, and high staking rewards.

Which coins will explode in 2024? ›

Here's our list of cryptos that will explode in 2024:
  • Pepe Unchained (PEPU) – Iconic meme token built on a layer-two Ethereum blockchain.
  • The Meme Games (MGMES) – Meme coin that could explode, offers gamified presale bonus.
  • WienerAI (WAI) – A prime meme coin contender for explosive growth in 2024.

When should I cash out my cryptocurrency? ›

Take your profits in low-income years

The lower your income for the year, the lower the tax rate you'll pay on your cryptocurrency income. To minimize your tax bill, consider cashing out your crypto in years when your income is low.

How do I cash out crypto safely? ›

One of the easiest ways to cash out your cryptocurrency or Bitcoin is to use a centralized exchange such as Coinbase. Coinbase has an easy-to-use “buy/sell” button and you can choose which cryptocurrency you want to sell and the amount.

What is the fastest way to turn crypto into cash? ›

5 Easiest Ways to Turn Bitcoin into Cash Instantly in 2024
  1. Centralized Crypto Exchanges (CEXs)
  2. Crypto Debit Cards.
  3. Peer-to-Peer (P2P) Exchanges.
  4. Bitcoin ATMs (BTMs)
  5. Gift Cards.
Mar 15, 2024

Where is the best place to keep crypto safe? ›

The answer to the question “what is the safest way to store crypto” is a self-custody cold storage wallet. As covered earlier, options include hardware wallets and paper wallets. But that's not to say that holding 100% of funds in cold storage is right for everyone.

What's the safest device to store your crypto? ›

The most secure option would be to use a metal card or a “paper wallet.” It's also preferable to store a private key rather than a seed phrase on the paper wallet. In case you're wondering what the distinction is between a Private Key and a Seed Phrase.

Which crypto is most secure? ›

Which cryptocurrency is most secure? Ethereum is considered to be the most secure cryptocurrency as compared to other digital assets. This is largely because its platform uses the blockchain technology, which is one of the most robust technologies for digital transactions.

Which crypto to avoid? ›

Top Cryptos to avoid
Name of the CoinWhy It Should Be Avoided
Hex (HEX)Questionable claims of returns, lacks clear utility or revenue generation, making it a risky investment.
Shiba Inu (SHIB)Lacks differentiation and a competitive edge, with failed catalysts and a history of payment coins crashing after rapid gains.
4 more rows
Apr 10, 2024

How do you make $100 a day crypto? ›

If you're new to crypto day trading, here's what you need to know to make money. The most effective way to make $100 a day with cryptocurrency is to invest approximately $1000 and monitor a 10% increase on a single pair. This approach is more realistic than investing $200 and tracking a 50% increase on the pair.

What happens if your crypto goes negative? ›

According to how cryptocurrency is traded, it is virtually impossible for its price to be below zero. For instance, if the cryptocurrency's value is negative, the seller has to pay the buyer to sell it.

What to do when crypto is crashing? ›

Diversify your portfolio: Diversification is key in any market, but it is especially important in the volatile world of cryptocurrency. If one cryptocurrency drops in value, the others may not be as affected.

How do you benefit from crypto crash? ›

5 Top Ways You Can Benefit from the Crypto Market Crash
  1. Bargain Hunting.
  2. Separating the Wheat from the Chaff.
  3. Dollar Cost Averaging (DCA)
  4. Selling Short.
  5. Tax-Loss Harvesting.
  6. A Crypto Market Crash Doesn't Have to Spell the End of the World.

What crypto to buy that will explode? ›

SingularityNET and Fetch.ai are cryptocurrencies that could capitalize on the AI boom. Other cryptos that could be successful include THORChain and Sei. While Bitcoin and Ethereum are already established, they still have solid growth potential.

Will crypto recover after crash? ›

It's certainly possible for cryptocurrencies to recover from a crash, but it's important to remember that the cryptocurrency market is highly volatile and it's impossible to predict exactly how it will behave in the future.

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