The unfavorable conditions surrounding the crypto winter have made it a matter of concern for many crypto participants. Such conditions include the psychological effects of losses and the general fear that dominates those periods and affects investors’ mental health.
Here, we’ll outline how crypto winter can affect your mental health and show you five ways to stay mentally healthy during such adverse market conditions.
What exactly is a crypto winter?
A crypto winter is a prolonged period of falling prices in the crypto market. During this season, market sentiment remains negative for a long time, with panic and fear replacing optimism.
The Bitcoin price began to fall from its all-time high in October 2021, and by November 2022, it had fallen more than 70%. Total cryptocurrency market capitalization is also down significantly from its all-time high of $2.9 trillion in November 2021, and is currently below $800 billion.
This is not the first time a crypto winter has occurred, as major ones occurred in 2014, 2015, and 2018.
How a crypto winter can affect your mental health
During a crypto winter, investor portfolios are often low and in deep losses. Since no one is comfortable losing money, the continued decline in portfolios creates fear in the market. Consequently, many investors spend more time studying crypto market charts for opportunities to quickly recover lost money, which is often unsuccessful.
Many traders also develop compulsive trading behaviors when experiencing losing streaks; they forget that not trading at all might also be the best trade for a certain period. They get so attached to charts and their trading devices that it starts to look like an addiction.
Longer screen time causes stress, fatigue, and increased anxiety. Also, having continuous losses or making little profit that doesn’t quickly make up for the lost money can lead to depression, which affects the productivity and overall mental health of traders.
5 Ways to Stay Mentally Healthy During a Crypto Winter
Here are some ways to ensure your mental health is in the best possible state during a crypto winter:
1. Don’t be scared
Knowing that the prices of different cryptocurrencies have gone through various ups and downs and that there have also been major bear markets in the past is a reason not to worry.
With all the price ups and downs that have occurred over the years, the cryptocurrency market has continued to grow, gaining new shares and projects from time to time.
2. Take a break from crypto
Taking a break from crypto can take your mind off losses and unfavorable market conditions. You may need to switch your attention to other activities to make sure your mind is clear.
You could learn new skills, focus on other aspects of your life, or even spend more time with friends. You may also need to uninstall apps and block all cryptocurrency-related notifications during the break. What’s the point of spending more time in the market when you know it won’t change the overall market situation?
3. Exercise for Mental and Physical Health
Exercise has always been shown to be an effective mood booster, making it a good treatment for anxiety and depression. It also increases your heart rate, improving your body’s ability to respond to stress.
Trading and investing require concentration, focus and alertness. Being slow and fatigued can prevent you from paying attention to details. As a result, you become more prone to trading errors, which is not something you would want, especially during a crypto winter.
4. Think of it as a long-term game (no revenge trading)
It’s easy to get lost in the heat of trading, especially when you’re on the losing end, but always remember that it’s a marathon, not a sprint. Spot traders who bought Bitcoin in 2017 when it peaked were stuck for nearly three years as the market didn’t return to that price until 2020. Only those who were very patient and knowledgeable got their money back with a profit. .
Many investors who don’t understand this try to execute revenge trades. Revenge trading is a typical emotional response when a trader suffers a significant loss. The act makes them try to make a quick profit after having significant losses or a series of losses.
In revenge trading, traders trade on impulse without any analysis to inform or support their trading decisions. Revenge trading often leads to even bigger losses, putting you in more sticky situations.
5. Learn something new about the market
Many people started to enter the cryptocurrency market during the bull run that started in 2020. The bull run lasted a long time, and most of those who bought crypto at that time would have seen some investment returns. Most of those who fall into this category did not have time to learn about crypto – they followed the crowd to buy and hold certain tokens to get some return on their investments.
This season could be a time to learn something new. You could learn other ways to make money in the crypto industry, such as new ways of trading that may not be affected by the crypto winter, as well as trading short-term strategies like scalping, or trading derivatives like futures contracts and futures contracts. perpetual
You might also find it interesting to know how to survive crypto bear markets and other ways to get involved in the crypto market without actually trading, such as content creation, crypto mining, social media influence, and many more.
How long will the crypto winter last?
Previous crypto winters have lasted around two years, but this does not necessarily mean that the current one will follow the same pattern. The main determinants of the duration of a crypto winter are market fundamentals specific to different time periods.
The extended bear market condition is not only common in the crypto market but also occurs in the stock market, and we have seen it rally many times. The crypto market might start to show some signs of recovery in 2023, but nothing is guaranteed as we cannot predict the future.
So, until we see a full market recovery, make sure you’re in the best frame of mind and avoid making decisions that put you under the weather.