Currency Crashes, Debt Spirals and FUD: How to Survive the Bear.

Currency Crashes, Debt Spirals and FUD: How to Survive the Bear.

Just one year ago, every crypto-enthusiast thought they were going to be rich. The blow off top was guaranteed to be massive and there was “plenty of time to sell!” 

What a difference a year makes. First, global asset markets crumbled. Now there’s shocking volatility in world currencies! The Pound plummeted to near parity with the U.S. dollar amidst alarm bells ringing in a global debt crisis. Even billionaires are scared. Super-investor Stanley Druckenmiller is predicting hard times well into 2023. With all this FUD, the one question on everyone’s mind is “What should I do (besides panic)?” The easy answer to this question might be boring: all one has to do is stay engaged, don’t panic sell and get ready to invest! 

Investors who can afford to hold on have history in their corner. Analysis of asset markets during hard times–like 1973, 1987, 2001, and 2008–show that market bottoms come within two years of the previous bull’s top. Only 1929’s Great Depression downtrend lasted three years. This should be reassuring for those worried about the current economy. Back in 1929, governments had never employed Keynesian economics. No matter how pessimistic one might be about their current leaders, governments are much smarter than the do-nothing Hoover administration or the Deutsche Mark-debasing Weimar Republic of the 1930s. These hard times are actually an opportunity to buy low and sell high in the future. 

The problem is when to buy and what to do in the short term. For those holding Euros, Pounds or anything non-USD, there is the question of converting savings to the Dollar. The coming winter energy crisis could keep the dollar strong while punishing global currencies even more. Additionally, the Fed is unlikely to pivot in the short term; thus, the Dollar should remain attractive in Forex markets. On the other hand, buying Dollars now might be risky. The DXY chart is starting to look like a parabolic memecoin! In the face of this difficult decision, diversification is usually smart. Perhaps holding some USD is a good hedge against winter + Putin putting a hole in your wallet. Those who are crypto savvy have the advantage of easily converting fiat into USDC. Many exchanges, like FTX, allow for zero fee conversion into USDC. Avoiding fees is obviously a great way to protect your money!

Once your fiat bag is set, it’s time to think about buying back into the market. Playing it safe in crypto is a good recipe for making way more money than the average investor. Dollar Cost Averaging is the safest strategy. Pick a small basket of coins you think are built for the long-term–my picks are BTC, ETH, MATIC, EGLD and a few others–and make a weekly buy FOR THE NEXT YEAR. Sure, this means you aren’t buying the bottom. But the truth is no one knows exactly when to buy or when to sell. The point of this strategy is that prices are low now. If they go lower, you will continue to buy low. If the crypto bottom was actually in June, you will buy the lowest prices possible before the next bull run. All that matter is how your bag looks in 2025. If you can hold on and accumulate now, you will almost certainly profit later.  

Don't forget the dreams of web3 and the asymmetrical investment opportunities presented by crypto. Whether it's BTC's hedge against inflation, NFTs giving ownership and identity back to individuals, smart contracts offering loans faster and cheaper than banks, or the metaverse restructuring life online, there are many reasons to stay optimistic during these dark days!

editors note: None of this story should be considered financial advice. This story is for educational and entertainment purposes only. The author’s opinions do not reflect the opinions of redlion.news

Writer and Redlion's editor-in-chief. Musician, 🥁 streamed over 100,000,000 times playing for Caught A Ghost, Magic Bronson and more. 2017 Experian hack victim... made the benefits of web3 easy to understand. Listening is his superpower.

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