Here, we’ll describe how the 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 an extended period of falling prices in the crypto market. During this season, the market sentiment remains negative for a long time, and panic and fear replace optimism.
Bitcoin’s price began to fall from its all-time high in October 2021, and by November 2022, it had dropped by more than 70%. The total cryptocurrency market capitalization also dropped significantly from its all-time high of $2.9 trillion in November 2021, and it is presently below $800 billion.
This is not the first time a crypto winter has occurred, with significant ones happening in 2014, 2015, and 2018.
How a Crypto Winter Can Affect Your Mental Health
During a crypto winter, investors’ portfolios are usually down and in deep losses. Since no one is comfortable losing money, the continuous dip in portfolios creates fear in the market. Consequently, many investors spend more time studying the crypto market charts for opportunities to quickly make up for the lost money, which often turns out unsuccessful.
Many traders also develop compulsive trading behaviors when they experience losing streaks; they forget that not trading at all could also be the best trade for a certain period. They get so attached to the charts and their trading devices that it starts to look like an addiction.
The longer screen time causes stress, fatigue, and increased anxiety. In addition, having continuous losses or making little profits that do not quickly make up for the lost money can lead to depression, which affects traders’ overall mental health and productivity.
5 Ways to Stay Mentally Healthy During a Crypto Winter
Below are some ways to ensure your mental health is in its best possible state during a crypto winter:
1. Don’t Panic
Knowing that the prices of different crypto have gone through various highs and lows and that significant bear markets have also happened in the past is a reason not to fret.
With the whole price ups and downs that have happened over the years, the crypto market has continued to grow, getting new involvements and projects from time to time.
2. Take a Break From Crypto
Taking time off from crypto can clear your mind of the losses and unfavorable market conditions. You may need to shift your attention to other activities to ensure your mind is clear.
You could learn new skills, concentrate on other aspects of your life, or even spend more time with friends. You may also need to uninstall applications and block all notifications related to cryptocurrencies 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 proven to be an effective mood booster, making it a good treatment against 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 may prevent you from paying attention to details. As a result, you become more prone to mistakes while trading, which is not something you’d want, especially during a crypto winter.
4. Think of It as a Long-Term Game (No Revenge Trading)
It is easy to lose yourself in the heat of trading, especially when you are on the losing side, but always remember that it is a marathon, not a sprint. Spot traders who bought Bitcoin in 2017 when it reached its peak were stuck for nearly three years, as the market didn’t return to that price until 2020. Only those who had a lot of patience and were well-informed recovered their money with profits.
Many investors who do not 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 attempt to make a quick profit after making significant losses or a series of losses.
In revenge trading, traders trade on impulse without any analysis informing or supporting their trading decisions. Revenge trading often leads to even bigger losses, putting you in messier situations.
5. Learn Something New About the Market
A lot of people started getting into the crypto market during the bull run that started in 2020. The bull run lasted a long time, and most of those who bought crypto then would have gotten some investment returns. Most of those who fall into this category didn’t 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 of making money in the crypto industry, like new ways of trading that may not be affected by the crypto winter, just like trading with short-term strategies like scalping or trading derivatives like futures contracts and perpetual futures contracts.
You may also find it interesting to know how to survive crypto bear markets and other ways of getting involved in the crypto market without having to trade, like content creation, crypto mining, social media influencing, and many more.
How Long Will the Crypto Winter Last?
Previous crypto winters have lasted about two years, but this does not necessarily mean the ongoing one will follow the same pattern. The major determinants of how long a crypto winter would last are fundamental market factors specific to different time periods.
The elongated bear market condition is not only common to the crypto market because it also happens in the stock market, and we have seen it recover many times. The crypto market could start showing some signs of recovery in 2023, but nothing’s guaranteed as we can’t predict the future.
So, until we see a full market recovery, ensure you are in the best mental state and avoid making decisions that will put you in unfavorable conditions.
