What NOT to do With Your Crypto in Times of Economic Crisis

Every one of you most probably digested all “what to do…” pieces about cryptocurrencies. Yet, you are still not sure what to do with your crypto in times of economic crisis. Well, that’s because a pack of “experts” are telling you to HODL while, at the same time, others are trying to convince you to invest your coins with the company which trades on your behalf. However, it might just be that they don’t have your best interest in mind.

What’s the purpose of this column, you may ask yourself. Let’s just say that we are going to try to explain what not to do with your crypto in the upcoming times of the economic crisis. Because knowing what not to do is the first step towards doing the right thing.

How Will Crypto Behave During the Economic Crisis?

This is the hardest question of them all. The fact is that cryptocurrencies didn’t exist during past global recessions. Therefore, we don’t have a historical pattern to come up with a definite conclusion. Nevertheless, by being aware of the fundamental characteristics of cryptocurrencies, we can try to predict the future.

It is an undeniable fact that the world is going to sink into a deep recession in the post-COVID19 era. Money-printing machines working non-stop to bail out giants of various industries will leave retail investors with cash that’s worth maybe even half of what it was a year before. Thus, an average Joe will, naturally, look for a way to bail himself out of the financial abyss.

Despite their high volatility, cryptocurrencies remain detached from the inside influence of governments. Moreover, the majority of cryptocurrencies have a predictable inflation rate. As such, they should be a natural solution for an individual to guard against the devaluation of fiat currencies. Will crypto flourish in times to come? It is still too early to say. But there are things you should know nonetheless.

With all that said, here are a few things you should never do with your crypto during the economic crisis.

HODL Your Crypto

No matter what all those Bitcoin maximalists say, HODLing your Bitcoin is a (ta-da-daaaaaamm) bad idea during the downtrend. Let’s repeat this; stubbornly keeping hold of Bitcoin (and similar cryptocurrencies) during the negative market sentiment is financial suicide.

Don’t get me wrong, it’s not wrong to HODL any crypto during the bearish trend. However, there are more than a few top cryptocurrencies that reward HODLers. Every cryptocurrency that is based on the Proof-of-Stake (PoS) consensus reaching mechanism is better to keep during the bad cycle than Bitcoin. Especially during such indecisiveness as we are witnessing today. Owning a masternode is even a better idea than having a basic PoS coin in your wallet.

The calculation is simple. For example, when you HODL 1 BTC, and the price drops by 20%, you still only own 1 BTC. It’s just that the price is not what it used to be. On the other hand, if you own, let’s say, Dash (DASH) masternode when the price starts plummeting, you may lose some value but you will have more coins when the price recovers.

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Start Trading

This one is simple. If you are not experienced, you simply don’t want to start speculating with your crypto with the world burning around you. Especially in the derivatives market.

This the quickest way to lose your funds. Even more so if the first few trades go well. Naturally, this will lead to a higher level of confidence and, analogically, more risk in trading. Once the overconfidence kicks in, bad trades happen.

Alternatively, if those initial trades go wrong, the panic kicks in. When a trader feels the need to make up for the loss in the shortest possible period, he doesn’t analyze well or thoroughly enough and he might take the wrong position. Finding himself on the wrong end of the trade will lead to liquidations in the derivatives market. Thus, the novice trader loses his funds.

Yet, if you want to start trading, these times are perfect for learning and perfecting trading strategies. Some of the trading platforms out there have the demo trading option which is perfect for finding your way through all those indicators, formations and patterns. You can perform technical analysis, place a demo trade and see how well you did the job without the risk of loss. One such is BitMEX, so give it a go.

Giving Up

No matter what happens, and whatever you do, don’t give up on cryptocurrencies. Remember, cryptocurrencies are not just an object of speculation, despite the fact that most investors view it as such. Crypto can also become a career without actively trading in the market.

A lot of people got laid off and a lot more layoffs are to come. Since the cryptocurrency market is still somewhat independent, there is always a chance to earn some coins on the side by doing what you already know.

If you are a great wordsmith, write. There are more than a few online publications that would give you the opportunity and reward your effort with crypto. What’s even better, you will definitely learn something new. If you also have a vast knowledge of the technical aspect, you are a gem yet to be revealed.

You can also start your own blog or join some decentralized blogging platform that rewards authors with crypto such as Hive. What’s best is that you can do most of the crypto-related jobs from the comfort of your own home. Possibilities ate literally limitless and, once you start thinking about it, you’ll find that you already have skills to utilize in the crypto world.

If you don’t quit on your crypto, once the market recovers, crypto is going to make it up to you many times over. You only have to use the tools already at your disposal.

In the End…

Cryptocurrencies do have the potential to provide relative safety during the recession. In fact, crypto is the only means of payment on a safe distance from the financial establishment. Therefore, there are much worse things than believing in crypto when stocks and other traditional assets go under. You just have to know what not to do with your crypto in times of economic crisis.

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