Survival kit for Crypto winter
Winter set in rather early in the crypto space and with it has come a blizzard of surprises which caught many off guard. The wave of snow storms has negatively impacted the crypto ecosystem. First it was the Terra storm which initiated the process of terra forming the cryptosphere to a terrain that has become almost treacherous to transverse especially for newcomers.
In its wake other storms such as that of Three Arrows Capital, Voyager Digital and more recently Celsius followed. As if that wasn't enough one of the more popular bridges to reach the SmartBCH ecosystem (CoinFlex) was virtually blown to bits cutting off many in the SmartBCH community from the BCH mainland. Thankfully it appears that reconstruction work has since commenced but with limited functionality of the bridge. Speaking in real world terms, CoinFlex has initiated a plan to allow its users to withdraw up to 10% of their funds while the remaining 90% will be considered as locked funds.
These locked funds will appear as balances which are utterly useless to the owners till whenever Coinflex can sort itself out fully . Pending whenever that happens the funds cannot be withdrawn or traded. This scenario clearly highlights one of the major risks associated with keeping one's funds or assets in centralised exchanges.
Survival Tip 1:
Use a decentralised or hardware wallet
Hence the number one tip in our survival kit is DO NOT store your funds or assets on centralised exchanges as it is akin to transferring ownership of such assets to whoever runs or administers such exchanges. It is thus preferred to keep assets in decentralised wallets or better still hardware wallets to have full control over them.
In light of the renewed instability that has hit the crypto market, it is necessary to be creative as to strategies guiding investment decisions. This is what informs the next survival tip.
Survival Tip 2:
Invest in assets that can be staked
Invest in stakable assets with decent or reasonable APR. With such investment even when the market goes sideways , you still make gains in terms of asset accumulation from staking. In choosing such assets please consider the following attributes and do not be enticed only by high APR .
Good utility or use case : This is very important because it implies that even in a bear market, such asset remains relevant and will continue to be utilized. It shouldn't just be one that is dependent on hyping by an influencer or influencers on social media. This utility will also enable such asset maintain some sort of stability while others are plummeting price wise in a bear market.
A clear road map: Someone once said "you may have the best aircraft and pilot, but without a clear vision of where you're going you will never arrive at your destination. This is the importance of a road map, it gives or tells you the direction in which a project is headed. It may be inevitable sometimes to alter the 'check' points as well as timelines for them as deemed necessary. The absence of a clear or realistic road map enables the community or investors to track the progress being made. Hence it is not a wise decision to invest in any project which either lacks or has an unrealistic road map especially for long term investments.
Regular progress updates: Any project that keeps its community or investors in the dark even in the face of obvious challenges or threats should be avoided. The absence of good public relations or regular updates on progress being made is a danger sign especially in the crypto space with its associated volatility. These updates help to boost investor confidence and as such any project truly intends to succeed will make it a priority to issue regular updates of progress as well as challenges.
Survival Tip 3:
Always be informed
Be abreast with trends or happenings in the cryptospace to enable one make the best investment decisions. Information they say is power. This is particularly true in the crypto space. Getting the right information at the appropriate time is vital to avoid making wrong investment decisions which could leave one rekt. An investment could be going well only to nose dive and plummet to the abyss. More often than not there are usually hints or warning signs which can only be gleaned with access to the right information.
If you have funds invested in any project endeavour to be a member of their social media communities or groups and also follow their social media handles. This affords you the opportunity of getting information directly 'from the horses mounth' and such information or attitude displayed by the Devs to enquiries or queries could well form the basis for you to decide if you will be comfortable with them managing your investment.
Survival Tip 4
Use the DCA approach
While some crypto pundits suggest that we have seen the bottom in terms of prices in the crypto markets , others opine that we are yet to see the true bottom. Hence for this reason it will be wise to avoid the lump sum investing approach but rather adopt the dollar cost averaging (DCA) technique of splitting the entire sum to be invested into bits and making entry or buying in at intervals. This will provide some protection from inadvertently buying the top if one were to go all in at a single entry point.
These are just a few suggested survival tips to keep warm as crypto winter sets in. If you have others you'd like to share , please feel free to comment below.