5 Things To Do When The Crypto Market Is Down
In this article, we will provide a practical guide to help you understand what to do when the market is down.
TL;DR
- Buy the Dip - But Do It Smartly
- Don’t Panic-Sell - Zoom Out Instead
- Convert to Stablecoins
- Wait It Out
- Reorganise Your Portfolio
Table of Contents
- What Happens During a Crypto Market Crash?
- 5 Things to Do When the Crypto Market is Down
- Past Crashes to Learn From
- Common Mistakes to Avoid During a Crash
- Should I Sell or Hold? Decision Checklist
- Helpful Tools and Resources
- Safety Tips for Volatile Markets
- To Recap
- FAQs
A crypto crash happens when the prices of major cryptocurrencies like Bitcoin, Ethereum, and others are falling fast, often by 10% or more in a short period. These price drops can happen in a day or even in a few hours.
A crypto crash can hit hard — both financially and emotionally. Investors might panic, sell off their coins at a loss, or feel regret and fear. And for new investors, these moments can feel overwhelming and confusing.
But here's the good news: crashes are part of the crypto market’s cycle, and they don’t last forever.
In this article, we will provide a practical guide to help you understand what to do when the market is down. Whether you're new to crypto or have been in the game for a while, these five tips will help you make better decisions and stay steady, even when prices are falling.
What Happens During a Crypto Market Crash?
1. Prices Drop Rapidly:
During a crash, popular cryptocurrencies like Bitcoin, Ethereum, and others lose value quickly — sometimes by more than 20% in just a few hours or days.
2. Panic Selling Increases:
Many people get scared and start selling their crypto out of fear of losing more money. This is called panic selling. When more people sell at the same time, it causes prices to drop even further.
3. Trading Volumes Spike:
Because so many people are buying and selling at the same time, trading activity goes up. This makes crypto exchanges very busy. Some apps may even freeze or delay transactions due to high traffic.
4. Stablecoins Can Lose Value:
Even though stablecoins are designed to keep a fixed price, some can fail during a crash. Just like how the TerraUSD stablecoin lost its peg to the dollar and crashed completely, causing billions of dollars in losses.
5. Long-Term Investors Hold or Buy More:
Not everyone panics. Some experienced investors take this as a chance to buy more crypto at lower prices. They believe the market will recover over time and treat the crash like a “discount sale.”
6. News and Social Media Add to the Fear:
Negative headlines, social media rumours, and tweets from big influencers can make the situation worse. This can cause more people to sell quickly without thinking clearly.
7. Altcoins Crash Even Harder:
Smaller cryptocurrencies, known as altcoins, usually fall even more than Bitcoin during a crash. While Bitcoin might drop 15–25%, some altcoins can crash by over 50% because they are more risky and less stable.
8. Market Sentiment Turns Negative:
The general mood in the crypto space becomes fearful and uncertain. Investors stop trusting the market, and fewer people want to buy. This makes it harder for prices to go back up quickly.
9. Crypto Projects Lose Funding:
When prices fall, many crypto startups and projects lose investor support or run out of money. Some even shut down completely, especially if they depend on high coin prices to survive.
10. It Affects the Whole Ecosystem:
A crash doesn’t only affect coins. Crypto exchanges, apps, NFTs, and even blockchain games can lose users and revenue. The entire industry feels the pressure, not just investors.
5 Things to Do When the Crypto Market is Down
When the market is down, it’s easy to feel scared or confused. But instead of reacting out of fear, here are five smart things you can do to stay calm, protect your money, and even prepare for future gains.
1. Buy the Dip – But Do It Smartly:
“Buying the dip” means purchasing crypto when prices are low — like shopping during a big sale. If you’ve had an eye on a particular coin, this will be a great time to buy it.
The idea is to buy at a lower price and possibly sell later when the price goes up. Remember the golden rule - buy low, sell high.
Look at the charts, research the asset, and then buy the quantity you can afford.
However, don’t just rush in because something looks “cheap.” Here’s how to do it wisely:
- Do your research. Check what the coin does, who is behind it, and whether it has long-term value.
- Use Dollar-Cost Averaging (DCA). This means buying small amounts regularly instead of putting all your money in at once. For example, buying $10 of Bitcoin every week reduces the risk of buying at the wrong time.
- Avoid coins that have no real purpose or support. Just because a coin dropped doesn’t mean it will rise again.
Tip: Check the project’s whitepaper or updates from their team to understand its real potential.
2. Don’t Panic-Sell – Zoom Out Instead:
It’s tempting to sell your crypto when prices fall — but that’s usually the worst time to sell.
The market is down, and asset values have fallen. Selling right now might make you lose out on the potential profit ahead.
However, if you decide to sell, properly evaluate your portfolio and the losses you might incur from selling.
- Remember this rule once again: Buy low, sell high — not the other way around.
- In 2018, Bitcoin dropped to around $3,000. But by 2021, it went up to nearly $69,000. That’s over 20x growth!
- If you panic-sell during a crash, you lock in your losses. But if you hold (or “HODL”), the market often recovers.
Before you sell anything, ask yourself:
- Is this project still strong in the long term?
- Do I need this money urgently?
- Am I reacting emotionally?
Sometimes, doing nothing is smarter than doing something you’ll regret later.
3. Convert to Stablecoins:
If you're feeling nervous about the market crash, one option is to convert your assets to stablecoins. These are digital currencies tied to the value of the US dollar (or other stable assets), like:
Why use stablecoins?
- They don’t swing up and down like other coins.
- They help you protect the value of your money during a crash.
- You can easily reinvest when the market starts improving again.
For Example: If you move $1,000 worth of Bitcoin to USDT during a crash, and Bitcoin keeps falling, your $1,000 stays safe while you wait.
4. Wait It Out:
Sometimes, the best thing you can do is — nothing.
Don’t allow yourself to fall prey to FUD (Fear, Uncertainty, and Doubt). Keep an eye on the market, but don’t allow yourself to be overwhelmed by the falling asset values.
Market crashes don’t last forever. Historically, they recover with time. For example:
- The 2020 crash dropped Bitcoin to around $4,000.
- One year later, it was over $60,000.
What can you do while waiting?
- Monitor your portfolio calmly.
- Avoid checking prices every hour — it only increases stress.
- Use this time to learn more about crypto (we’ll talk more about this below).
Being patient can be a superpower in crypto. Those who wait usually win.
5. Reorganise your Portfolio:
One of the primary keys to success in crypto trading is constant diversification.
After the market stabilises, it’s a good time to check and adjust your investments.
Here’s how:
- Review your assets: Which coins performed well? Which ones failed badly?
- Reduce high-risk coins: Consider removing tokens that seem too volatile or have no clear value.
- Focus on strong projects: These are coins with real use cases, active teams, and long-term plans.
- Diversify: Don’t put all your money in one coin. Spread it across a few solid ones, including some stablecoins.
- Explore staking: Some coins let you earn rewards by holding them — like earning interest on your savings.
Rebalancing helps you stay ready for the next market move — up or down.
Bonus Tip: Focus on Learning, Not Reacting
Market crashes can be a good time to grow your knowledge and confidence. Instead of reacting in fear, use this time to learn and prepare.
1. Read Whitepapers: Whitepapers explain what a crypto project does. Read them to understand if the coin is worth investing in.
2. Watch Market Analysis Videos: There are many YouTube channels and blogs that break down market trends in simple ways. They help you understand why the market moves and what to expect.
3. Take Crypto Courses: There are free and paid courses on websites like Coursera, Binance Academy, and Udemy. Learning from experts helps you make better decisions.
4. Join Crypto Communities: Online forums like Reddit and Telegram groups are good for discussions. But remember — always double-check what people say.
5. Track and Review Your Trades: Write down why you bought or sold a coin, and what happened next. This helps you learn from your experience and avoid repeating mistakes.
Past Crashes to Learn from
1. The 2018 Bear Market
- What Happened: After Bitcoin hit nearly $20,000 in December 2017, the market crashed hard in 2018. By December 2018, Bitcoin had dropped to around $3,200 — an 84% drop in value.
- Why It Happened: The crash was caused by a combination of overhype, lack of regulation, and many new investors entering the market without understanding the risks. Many projects also failed because they had no real value or use.
- What We Learned: Crypto is very volatile. Prices can rise fast — but they can also fall just as fast. However, this crash didn’t kill crypto. Bitcoin recovered slowly, and by late 2020, it had reached new highs, recently hitting an all-time high of $100k in 2024.
2. The Terra/Luna Collapse (May 2022)
- What Happened: Terra (UST), a stablecoin meant to always be worth $1, suddenly lost its value in May 2022. Its sister token, LUNA, also crashed. The combined market loss was over $45 billion.
- Why It Happened: Terra used a risky system that relied on LUNA to keep UST stable. When people lost trust in the system, everyone tried to sell at once, and the whole thing collapsed.
- What We Learned: Not all crypto projects are safe — even the ones that look stable. Always do deep research and understand how a coin or token actually works before investing.
3. The FTX Exchange Crash (November 2022)
- What Happened: FTX was one of the biggest crypto exchanges in the world. In November 2022, it filed for bankruptcy after it was discovered that the company used customer funds for risky investments. Investors lost over $8 billion.
- Why It Happened: The collapse was due to poor management, lack of transparency, and no real oversight. Many users trusted the platform without checking how it handled money.
- What We Learned: Always use secure, trustworthy platforms. Just because an exchange is popular or heavily promoted doesn’t mean it’s safe. Self-custody (keeping your crypto in your own wallet) is often safer during uncertain times.
Common Mistakes to Avoid During a Crash
1. Chasing Losses:
Many people panic when their portfolio drops and try to “make back” their money by investing more into risky coins or trading aggressively. This is known as chasing losses. It’s a dangerous trap because it often leads to even bigger losses.
- Why it's risky: Crypto markets are volatile. Buying more without research can double your losses.
- Example: In the 2022 crypto crash, Bitcoin dropped by over 60% from its all-time high. People who bought during the drop expecting a quick rebound lost even more when it kept falling.
- Tip: Don’t throw good money after bad. Take time to review your strategy instead.
2. Selling at the Bottom:
Selling your crypto when prices are already low locks in your losses. This often happens when fear takes over and you feel like the market will never recover.
- Why it's common: Panic and social media hype make people believe the worst-case scenario is permanent.
- Example: During the March 2020 crash, Bitcoin fell to around $4,000. Many sold out of fear, but the price later rebounded to over $60,000 by 2021.
- Tip: Only sell based on your long-term plan, not temporary emotions.
3. Overtrading to “Fix” Mistakes:
Trying to correct earlier losses by constantly buying and selling is known as overtrading. It often leads to poor decisions and increased fees.
- Why it fails: Each trade comes with risks and costs. Acting out of frustration or urgency usually leads to more mistakes.
- Tip: Stick to your plan. Fewer, smarter moves usually outperform frequent, emotional ones.
4. Listening to Hype or Panic Tweets:
Social media can spread fear and misinformation quickly. Making financial decisions based on hype or panic tweets is risky and unreliable.
- Why it's misleading: Influencers and anonymous accounts often post emotional content that lacks facts.
- Example: In the Terra (LUNA) collapse of 2022, misleading tweets convinced many people to “buy the dip,” even though the project was failing. Many lost everything.
- Tip: Always do your own research and verify information from trusted sources before acting.
Should I Sell or Hold? Decision Checklist
Before you rush to sell your crypto, take a moment to go through this simple “Should I Sell or Hold?” checklist.
It’s designed to help you think clearly and make better financial choices — especially when prices are falling.
Helpful Tools and Resources
Below are five very practical tools and resources you can use to stay calm, informed, and prepared:
1. Portfolio Tracking Apps (e.g., CoinStats, Delta):
These free or low-cost apps help you see all your crypto investments in one place. You can track how much you've gained or lost, get price alerts, and view real-time market data.
- CoinStats: Supports over 8,000 coins and connects with major wallets and exchanges.
- Delta: Offers easy charts, price alerts, and tracks more than just crypto (stocks too).
Why this matters: Seeing everything clearly helps you avoid emotional decisions. You won’t have to log into multiple apps or exchanges to know where you stand.
2. Educational YouTube Channels:
Learning during a down market is one of the smartest things you can do. Obiex’s YouTube channel breaks down crypto topics in the simplest way, from beginner tips to market trends. It provides short, easy-to-understand videos and real examples using the Obiex platform.Why this matters: Education helps you make better decisions and prepares you for when the market rises again.
3. Reliable News Outlets (e.g., CoinDesk, The Block):
Don’t trust social media rumours. Always get your news from trusted sources.
- CoinDesk: One of the oldest and most trusted crypto news platforms.
- The Block: Offers detailed analysis and real-time news.
Why this matters: Reliable news helps you understand why the market is down and what might come next. It also protects you from falling for scams or false news.
4. Obiex Tools: Free Stablecoin Swaps & More
Obiex offers helpful tools you can use when the market is falling.
- Free stablecoin swaps: You can quickly switch from volatile coins to stablecoins (like USDT or BUSD) without extra fees.
- User-friendly interface: This makes it easier to manage your crypto without confusion.
- Naira wallet support: Obiex helps you exit to fiat when needed.
Why this matters: Switching to stablecoins can protect your money from big losses during a crash — and Obiex makes this fast and free.
5. Crypto Calculators and Learning Blogs:
Use tools like crypto calculators to understand how much you’re gaining or losing. Also, read blogs (like this one from the Obiex blog) to learn what to do next.
- Obiex blog posts are updated regularly with tips, guides, and explanations in simple language.
- Some calculators also help you plan how much to invest next based on your risk level.
Why this matters: The more informed you are, the better choices you’ll make — even in a tough market.
Safety Tips for Volatile Markets
1. Avoid Phishing and Scam Websites:
When the market crashes, scammers take advantage of the panic. They create fake websites and apps that look like real crypto platforms to steal your login details or trick you into sending your coins to the wrong address.
- Always double-check the website link before logging in.
- Bookmark official sites like Obiex to avoid fake pages.
- Never click on random links shared in Telegram, Twitter, or unknown emails.
2. Use a Hardware Wallet for Storage:
A hardware wallet is a small device that stores your crypto offline. This keeps your assets safer from online attacks, especially when prices are falling and hackers get more active.
- It’s like a USB stick that locks your crypto away from hackers.
- Even if your phone or computer is hacked, your funds stay protected.
- Brands like Ledger and Trezor are popular options.
Tip: Don’t keep large amounts of crypto on exchanges during a crash — move them to a hardware wallet for better security.
3. Double-Check Every Trade and Transfer:
When the market is moving fast, it’s easy to rush and make mistakes — like sending crypto to the wrong wallet or buying the wrong token.
- Always verify wallet addresses carefully, especially during high-stress times.
- Double-check the amount and network before you hit send or confirm.
- Take a deep breath — it’s better to be slow and safe than fast and sorry.
To Recap
- Buy the dip by researching coins thoroughly, using Dollar-Cost Averaging (DCA), and avoiding coins without real value.
- Avoid panic-selling and remember to ask yourself if the project is still strong long-term, if you need the money urgently, or if you're reacting emotionally.
- Convert assets to stablecoins like USDT or USDC to protect value during market crashes and reinvest when the market recovers.
- Sometimes doing nothing is the best strategy; monitor your portfolio calmly, avoid hourly price checks, and use the time to learn more about crypto.
- After the market stabilises, reorganise your portfolio by reviewing assets, reducing high-risk coins, focusing on strong projects, diversifying, and exploring staking opportunities.
- Use market downturns as an opportunity to learn by reading whitepapers, watching market analysis videos, taking crypto courses, joining communities, and reviewing your trades.
FAQs
Q1. What is a crypto market crash?
It’s when crypto prices drop very fast, often over 30–50%, in a short period.
Q2. Should I sell my crypto when the market crashes?
Not always. Selling during a crash can lock in losses. Review your long-term goals first.
Q3. What are stablecoins, and why are they useful?
Stablecoins are cryptocurrencies tied to real-world currencies like the US dollar. They don’t crash like Bitcoin or Ethereum and can protect your funds.
Q4. Can I still make profits after a crash?
Yes. History shows that prices often recover over time. Many investors who held through crashes made good profits later.
Q5. How do I know if my exchange is safe?
Use popular, trusted platforms like Obiex, and enable extra security features like 2FA.
Q6. Are there tools to help me track my crypto investments?
Yes — apps like CoinStats, Delta, or the Obiex app help you track and manage your portfolio easily.
Q7. What’s the best strategy during a crash?
Stay calm, don’t panic sell, diversify with stablecoins, and focus on long-term goals.
Q8. What’s the biggest mistake people make in a market crash?
Selling at the bottom or chasing losses by overtrading.
Q9. How long do crypto crashes usually last?
It varies. Some last weeks, others months. But historically, recovery always comes — usually within 1–2 years.
Q10. How can I protect my crypto during crashes?
Use hardware wallets, avoid phishing links, enable 2FA, and hold stablecoins to reduce risk.
What do you usually do when the market crashes? Tell us in the comments below 👇
Let’s learn together.
Disclaimer: This article was written to provide guidance and understanding. It is not an exhaustive article and should not be taken as financial advice. Obiex will not be held liable for your investment decisions.
