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Lana
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Asked: 2019-12-26T00:07:54+00:00 In:

What to do when the crypto portfolio is down?

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When the cryptocurrencies are not doing well and heading down, what should be done? Should I sell it?

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    1. Level 1
      This answer was edited.
      • Do nothing: In most cases, you should wait and be patient. Make sure that you do your technical analysis and have taken a position.
      • Re-evaluate your risk tolerance: Make sure that you reassess the risk tolerance, not based on emotion/feeling but through careful calculation.
      • Look at the big picture: Evaluate the bigger picture from both technical and fundamental aspects.
      • Research the fundamental reasons why the crypto is down: Make sure that why your portfolio is down. Not just the technical, but what factors are driving the trend such as back off of investors, regulation, scam etc.
      • Consider hedging: You can use various available tools for hedging
      • Diversify within crypto assets: You should rebalance the portfolio by selling one currency which is not performing well for buying a better one. Most currencies are exposed to similar risks.
      • Diversify across other financial assets: It can be a type of hedging. You can use assets such as bonds shares to distribute risk.
      • Add precious metals to the portfolio: Gold is particularly easy and saves to help you mitigate the risk.
      • Exchange with better crypto: You can swap the one which is not doing well by buying the one which has more potential. Again this would need thorough analysis.
      • Strengthen your current position: Even you should buy more if you think that the fall is a short term and there will be rebound. Warren Buffett is famous for buying more of a falling stock at cheaper prices when the markets drop.
      • Absorb the loss or quit: If you cannot absorb the losses, you can consider quitting the market.
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