Navigating the crypto crash can be challenging, but there are tools to help you in 2023

The crypto space is notorious for its significant swings and ups and downs. Yet the 2022 crash seems harsher and more unpredictable than previous bear markets. Still, there are ways for investors to safeguard their crypto assets and protect them despite the turbulent times.

Regardless of the somewhat hostile environment, crypto adoption is still rising, signaling that the bear times will end. According to recent research, about 20% of people in America who have never owned crypto plan to invest by the end of the year. But why is the space crashing when interest is on the rise?

Why was crypto crashing in 2022?

The underlying processes that determine how a market performs are numerous and often interconnected, leaving analysts with the tough task of untangling what went wrong. However, 2022 proved to be one of the most challenging years in the crypto industry to date.

Starting with the Terra LUNA fiasco at the beginning of the year, the fate of stablecoins was first put to the test. What is more, in the following months, we saw big companies and venture capital firms collapse. Wallet provider Celsius filed for bankruptcy, locking away customer assets, while the Three Arrows Capital hedge fund also defaulted, with its founders going into hiding.

More recently, we’ve seen the FTX centralized exchange crumble to pieces as it was revealed that the exchange misappropriated customer funds for years, and hackers managed to drain its wallets, leaving thousands of users with empty portfolios. The combination of these significant events and the added global economic pressure has left the crypto space in a twist.

Despite that, activity has remained strong, and traders and crypto enthusiasts are still closely monitoring their portfolios. One of the most important things investors can do during bearish times is to keep track of their portfolio and perform the necessary steps to protect their investment.

Automation can help you limit losses during the crypto crash

Regardless of your investment strategy, limiting potential losses is a crucial element, especially during bearish markets. With the advancement of trading bots and automation software, there are now many tools that can help you set up price-targeted trades.

Automating your trading is key to minimizing risk, especially as the crypto market is live non-stop, 365 days a year. Turbulence can occur at any point, which is why using automation mechanics like stop-loss limits can help you avoid unnecessary risk. A stop-loss limit allows you to set an automatic sale trigger that activates when a specific asset in your portfolio reaches a specified value you are not comfortable with.

Take this hypothetical scenario as an example. Your portfolio consists of 32 ETH, which you purchased at $1,000 per token. Since the purchase date, the valuation of the cryptocurrency has been on the rise, and 1 ETH is currently worth $1,100. With platforms like the TradeSanta bot, for example, you can set up an automatic stop-loss sale which will liquidate your ETH holdings at a price you determine. Putting the stop-loss at $1,050 per token will guarantee you still take a profit, and you won’t have to think about monitoring the market non-stop. Your portfolio value does not drop, and your ETH sale has been automatically triggered before the price of the token potentially drops even further.

Of course, this simply illustrates what stop-loss automation can do. Products like TradeSanta trading bot offer much more complex tools which can be applied to your trading experience. Importantly, managing risk through stop-loss, trailing stop-loss, or getting the best entry point by using MACD, RSI, Bollinger technical indicators, and TradingView stop Signals. A DCA strategy implies dividing your reserve funds into smaller chunks and buying with smaller amounts every time the asset’s price goes lower. And other automated processes can save you a lot of worrying in these turbulent times.

You can also check out the Cointelegraph Trading101 section to learn more about fundamental trading principles and tools you can use to minimize risk and potential losses during a bear market.

To find out more about TradeSanta, check out the useful links below: