One Night Bear Returns: 6 Strategies to Address Losses

Original Title: How to STOP Losing Money in Crypto!

Original Compilation: Golem, Odaily Planet Daily

Yesterday, the crypto market experienced another significant drop, with BTC briefly falling below $54,000 and ETH dipping below $2,900. In the past 24 hours, nearly $590 million in long positions were liquidated across the network.

The future market trend is hard to predict, but we must learn to face losses regardless. Whether you can correctly navigate through a loss period will determine if you can become the ultimate winner in the market. Crypto educator and technical analyst Duo Nine shares 6 strategies for dealing with losses for readers' reference.

Lock in Profits Timely

Short-term gains or unrealized profits are not enough; you must lock in profits. Without a clear mindset, the crypto market can quickly take them away.

As shown in the image below, this user lost $400,000 in a single trade. He started with $500 and gradually earned $400,000. But he lost all his profits in this one trade.

Aside from market FOMO factors, every lucky person will eventually lose their luck. You can win the market a hundred times, but the market only needs to win against you once.

To avoid this situation, if you are lucky enough to turn $500 into $400,000, your top priority should be to lock in some profits and keep them in cash. You can then continue trading with a bit more than your principal; even if the market performs poorly afterward and you lose your principal, you still have nearly $400,000 in profits. Over time, this will make you a better trader/investor and help you adjust your mindset more quickly after losses, refocusing your attention. You can only increase your principal, trading account, or portfolio when your strategy yields good results in the long term.

Stay Put and Look for the Best Buying Opportunity

Bear markets are the best opportunities for positioning. Typically, when people say Bitcoin is dead on social media, that’s the best time to start buying and taking risks. Strive to maximize the risk/reward ratio, which means finding high-odds bets.

To illustrate with the previous example, under the current weak market conditions for BTC, I would convert that $400,000 profit into USDC and participate in staking to enjoy passive income.

If calculated based on the previous guide with an annual yield of 29%, $400,000 could bring in about $10,000 per month. Of course, you can also choose more conservative staking yields; in any case, when the market declines further, the returns will still be positive.

Currently, it is not advisable to buy Bitcoin or any tokens. If the market continues to decline, consider timing your bottom fishing. Remember, not buying means no losses, and you still preserve the $400,000 profit.

Once the market shows signs of a bottom, you can buy Bitcoin in batches as you would in a bear market. This way, even if BTC continues to decline or consolidate, you will reduce some risk, and Bitcoin's price will eventually have the opportunity to recover and set new highs. With patience, a good entry point can easily double that $400,000.

Looking at the current cycle, if you bought Bitcoin for under $20,000 in previous bear markets, you would have outperformed the market. However, the richer your portfolio, the more BTC you should hold.

Don’t Trust Altcoins

Altcoins are not reliable currencies; they have very poor value storage in the long term. Most chains and applications do not need tokens; at best, they are just good technology.

A common way to incur losses in cryptocurrency is by buying the latest issued altcoins and holding them long-term, which is as futile as buying tulips years ago and hoping to get rich from them.

Altcoins are suitable for short to medium-term speculation, and that’s it. Any investment in altcoins for more than a year carries the risk of loss. While there are some exceptions, generally speaking, altcoins are not a ticket to long-term success.

They may make you rich overnight, but if you don’t follow the first point of this article, they can also go to zero immediately. Most altcoins will plummet 90% to 99% in a bear market due to lack of liquidity. This also means that insiders can easily pump them up, and once they profit, no one can stop the price from crashing. Bitcoin, being the most liquid cryptocurrency, does not have this problem.

Fundamentally, only Bitcoin, known as "digital gold," is a reliable currency. Ethereum is more like oil; its price fluctuates with network usage.

Don’t bet too much on altcoins, even though they may bring 10x to 100x returns. As you age and accumulate wealth, reduce your exposure to altcoins and focus on Bitcoin for inner peace; it’s worth it.

Don’t Quit Your Job to Trade Crypto Full-Time

95% of traders are losing, and only 5% are winners. Trading cryptocurrencies is harder than having a job because it operates 24/7. Trading full-time can be a bad decision; instead, it’s more appropriate to keep your job or find one you enjoy and invest in cryptocurrencies (mainly Bitcoin).

In fact, a good way to avoid losses in cryptocurrency is not to trade frequently. Instead, we can invest in this emerging industry; when investing, it’s like buying a casino, and trading is like playing its games, meaning we can invest in the infrastructure of the crypto industry from a long-term perspective.

In this sense, Ethereum and its DeFi derivatives are a great example. While it’s hard to predict, DeFi has made today’s Ethereum, while Bitcoin remains and will continue to be the most reliable currency.

If you want to protect your wealth, buying Bitcoin on dips is never a bad choice. Buying Bitcoin is not for selling it tomorrow but for holding it long-term and for retirement.

Reject Greed and Get Rich Slowly

Making a quick profit of 10x on a meme can provide a thrill and make greed take over, which is likely to lead to poor trades shortly after. Never go all-in on any altcoin. You can speculate freely, but always maintain a small position.

Making a year’s salary in one trade can change your life, but losing everything in one trade can do the same. Meme coins are attractive because you can get rich overnight (or become poor overnight). They are highly risky and only worth it if you participate with a small amount of principal.

In this case, taking bigger risks makes sense. If you already hold a significant amount of cryptocurrency assets (mainly Bitcoin), then it’s enough to speculate on meme coins or similar high-risk coins with just a few percentage points of your total assets.

If you make a big profit on a meme, sell it and never look back, following the first point of this article. Never sell Bitcoin to buy altcoins; if you find yourself doing this, there’s only one reason: greed.

Accept Losses and Manage Risks

Failures and losses are unavoidable in this field, but we can mitigate their impact and reduce losses. The market does what the market does; our role is to be risk managers.

Making money should not be our ultimate goal; instead, we should strive to maximize our time and freedom. Bitcoin is the answer; most people only realize this after losing quite a bit by playing with altcoins.

By accepting losses, you can focus more quickly on what’s important and improve your risk management skills. Those in the top 5% of traders in this game win because they manage risk well; they may also incur losses frequently, but they are small, and they can make big profits several times a year.

Losses are common, but keep them small enough so they don’t throw you off balance.

Be patient with yourself and find your own rhythm; it applies not only to the cryptocurrency field.