Crypto Crash: Tips for Dealing with Market Crashes, Do These 5 Things!

Bittime - The crypto market is experiencing a decline or crypto crash in the last few days. In fact, the price of Bitcoin is currently down around 6% in the 24 hours that this article was written. Check out the tips for dealing with crypto crashes in this article, come on!

Crypto asset prices can soar high in an instant, but can also drop drastically in a matter of hours. This phenomenon, often referred to as a “crypto crash,” has become an integral part of the world of digital assets. 

However, many investors remain unprepared to face this situation, so they panic and make detrimental decisions. So that you don't get caught up in panic, let's discuss the causes and the best strategies for dealing with it.

What Causes Crypto Crashes?

Source: Libertex

Crypto crashes occur due to various factors, ranging from market sentiment to government policies. Here are some of the main causes:

1. Lack of Liquidity: Markets with low liquidity are more susceptible to crashes because it is difficult to find buyers when many investors want to sell their assets.

2. Slow Crypto Adoption: If the growth of new users is not in line with market expectations, crypto prices could decline due to less strong demand.

3. Government Regulations and Prohibitions: The decision of a large country like China to ban crypto transactions could cause mass panic and drastic price drops.

4. Global Monetary Policy: Higher interest rates could make investors shift away from high-risk assets like crypto to more stable investments.

5. Big Crypto Impact On Altcoins: If the prices of Bitcoin and Ethereum fall sharply, other altcoins are usually affected because most crypto assets are correlated with each other.

Read also: The US Trade War and Its Impact On Bitcoin, XRP, and ETH

How to Deal with a Crypto Crash Before It Happens

To avoid panic when the crypto market drops, there are several steps you can take beforehand. The following is the explanation:

1. Portfolio Diversification – Don't just invest in one type of asset. Spread investments across various instruments such as shares, bonds and gold.

2. Choose a More Stable Crypto – Bitcoin and Ethereum tend to be more crash-resistant than lesser-known altcoins.

3. Stay Updated with Market Trends – Follow the latest news to understand market movements and potential risks.

4. Prepare Liquid Funds – Save some funds in cash so you are not forced to sell assets at low prices.

5. Use Low Cost Platforms – Choose an exchange that offers low transaction fees so you don't experience additional losses when trading.

Tips for Dealing with a Crypto Crash After It Happens

If the crypto market is experiencing a crash or decline, stay calm and take the following steps:

1. Keep Calm and Avoid Panic: Don't immediately sell assets when prices drop. Panicking will only make the decision worse.

2. Understand Market Volatility: Crypto prices often fluctuate sharply. If you believe in the fundamentals of the assets you own, stay patient.

3. Use HODL Strategy: HODL (Hold On for Dear Life) is a long-term strategy where investors keep their assets even when the market is down.

4. Stay Diversified: After the crash, check your portfolio again. Make sure you don't depend too much on one type of asset.

5. Focus on the Long Term: If you believe in the future of crypto, don't get too fixated on short-term price movements.

Conclusion

Crypto crashes are scary, but that doesn't mean you have to make rash decisions. With careful preparation and the right strategy, you can face this situation more calmly and wisely. 

Remember, the crypto market does fluctuate, but many long-term investors still make profits with the right strategy.

Read also: Litecoin ETF: Potentially Approved by US Regulators

FAQ

1. Why are crypto prices so volatile?

Because it is still a new asset with many influencing factors, such as regulations, market adoption and investor sentiment.

2. Will crypto bounce back after the crypto crash?

There are no guarantees, but history shows that Bitcoin and Ethereum always recover after major crashes.

3. How to avoid big losses during a crypto crash?

Diversify your portfolio, invest only money you can afford to lose, and don't make decisions based on emotions.

How to Buy Crypto on Bittime

Want to trade sell buy Bitcoins and crypto investment easily? Bittime is here to help! As an Indonesian crypto exchange officially registered with Bappebti, Bittime ensures every transaction is safe and fast.

Start with registration and identity verification, then make a minimum deposit of IDR 10,000. After that, you can immediately buy your favorite digital assets!

Check the exchange rate BTC to IDR, ETH to IDR, SOL to IDR and other crypto assets to find out today's crypto market trends in real-time on Bittime.

Also, visit the Bittime Blog for interesting updates and educational information about the crypto world. Find reliable articles about Web3, blockchain technology, and digital asset investment tips designed to enrich your crypto knowledge.

Reference 

Finance Buzz, Be Ready: What to Do When Crypto is Crashing, accessed February 3, 2025.

Libertex, Crypto market crash explained: A potential opportunity?, accessed February 3, 2025.

Author: Y