A drawdown is temporary
If you’ve experienced a drawdown in your cryptocurrency portfolio, know that you’re not alone. Every investor who decided to stay in the crypto market for a long time has experienced the same moments. Many famous traders have lost a significant amount of capital – as much as half or even two-thirds of their assets.
Historical data confirms this
✅ Bitcoin has declined by more than 80% as many as five times in its history. But each time it has recovered, reaching new highs.
✅ Those who remained calm and survived the fall were rewarded with multiple increases in value.
✅ Beginners often leave the market precisely during the crisis, selling assets at the lowest level. Experienced players, on the contrary, use this situation to buy..
Psychology plays a key role
⚠️ In times of volatility many people feel fear, anger, anxiety. These feelings are normal, because the brain perceives the loss of money as a threat to survival.
❗ It is important to remember that emotional decisions are rarely the right ones. The best way to cope with the situation is to postpone drastic steps and calmly analyze what is happening.
What to do:
- It’s not a loss-until you close the position.
- A drawdown gives you a chance to rethink your strategy, reassess your risks and determine new tactics.
- History shows that markets are cyclical. After winter, spring is sure to come.
Useful tips:
- Believe in your chosen projects and technologies. If you’ve invested meaningfully, now might be a good time to wait a bit.
- Take a break. Uninstall price-tracking apps. Switch to other things and take a break.
- Sometimes the best solution is to do nothing at all. Just weather the storm.
Remember, temporary hardship strengthens your future financial situation. Don’t let a temporary setback affect your long-term plans!
How to stay calm during drawdowns?
To stay calm during drawdowns, it is important to follow a few simple rules and psychological techniques:
1. Recognize the nature of markets
Markets are cyclical and drawdowns are inevitable. Realizing that drawdowns are part of the game helps reduce stress levels. Look at historical charts of well-known assets – almost any asset experiences severe fluctuations but then recovers.
2. Separate strategies
Dividing your investments between different asset classes reduces the risk of losing all of your capital at once. Diversification also makes it easier to weather localized crises in individual sectors.
3. Establish a clear exit strategy
Determine your loss and profit lock-in levels in advance. Clearly following your own strategy will avoid panic and impulsive actions under strong emotional pressure.
4. limit watching news and monitoring quotes
Constantly checking the price of an asset only increases anxiety. Instead of constant watching, it is better to focus on learning the basics of economics and financial instruments.
5. Control your emotions
When strong feelings arise, stop and think rationally. Emotions make you make bad decisions, especially in the face of fear of losing money. Try distractions, sports or hobbies.
6. Socialize with like-minded people
Connecting with people who have similar interests and experiences helps to share ideas and get support. Discuss with them past cases of successful investments despite previous failures.
7. Remember perspective
Success comes to those who are willing to wait and endure hard times. All great investments have gone through tough times before bringing profits to their owners.
Following these principles will help you navigate through any financial turmoil with confidence and capitalize on future market upturns.
