Three Dangerous Mistakes When the Market Collapses and How to Avoid Them

When the financial market undergoes strong fluctuations, emotions can lead to mistakes. Instead of panicking and acting impulsively, equip yourself with a rational investment strategy. Here are the three most common mistakes that many investors make in times of crisis, along with strategies to help you navigate this difficult period wisely.

1. Sell-off Due to Panic When Hitting Bottom 🚨 Error: When the market drops sharply, many investors feel panicked and decide to sell off immediately. They think they have to retreat to avoid losses, but this action usually only turns them into an 'escape route' for other investors with better strategies. Real-life example: Bitcoin: Many people believed that when Bitcoin dropped to as low as 3,100 USD in 2018, the market was 'dead', but later it soared to a peak of 69,000 USD in 2021. Ethereum: It once plummeted to 80 USD but then surged beyond 4,000 USD. Solana: After the FTX collapse, the price of Solana plummeted to only 8 USD, but then skyrocketed by 1,000% in a short period of time. Advice: Maintain a positive mindset: Remember that the decline is just part of the market cycle. Long-term view: Evaluate based on long-term trends rather than short-term fluctuations. Establish a retreat strategy: Set reasonable stop-loss levels and adhere to the plan.
2. "Buy in the Early Discount Period" Too Early - All-In Carelessly 💰 Mistake: When the price drops, the feeling of "buying at a low price" can make you decide to invest all the money you have at that time. However, this is very dangerous if the market continues to decline further or if you choose the wrong project. Risks to note: Market hasn't bottomed out yet: Prices could drop another 15% or more. Irrecoverable projects: Some coins, even though currently cheap, may never recover their initial value. Replacement strategy: Investing by tier: Use the 'laddering' method - gradually buying at different price levels to average the purchase price.Maintain cash reserves: Always have a reserve to take advantage of deeper price declines if there is an opportunity.Choose quality projects: Prioritize coins with a solid foundation like Bitcoin, Ethereum, or projects with real development potential, avoiding 'hype' coins based solely on market sentiment.
3. Hold Onto Assets – 'HODL' Forever Without Knowing When to Take Profit 🔄 Mistake: The saying 'HODL forever' has been trusted by many investors, but not every coin has the ability to recover or reach new highs. Many projects have proven that if you don't know when to take profits, you may get stuck with assets that are no longer valuable. Typical example: LUNA, Voyager, Celsius: Projects that were once hot but then collapsed, causing investors to suffer heavy losses when following the "hold forever" strategy. Smart approach: Set price target: Determine the profit-taking price level for each price increase phase in order to preserve profits when the market recovers. Adjust investment portfolio: When noticing a change in market trend, consider redirecting investments towards assets with better potential. Monitor technical indicators: Do not hesitate to reassess your position if the currency breaks important long-term support levels. Conclusion To survive and even profit in a market downturn, you need to equip yourself with not only knowledge but also a strong mindset. Avoid common mistakes such as panic selling, all-in investment in the 'discount period' too early, and sticking to assets with no potential. Build an investment strategy based on careful analysis, effective risk management, and always be ready to adjust to market developments. Question for you: In the current volatile market conditions, do you have any specific plans to protect and grow your investment portfolio? Let's share your opinions and experiences in the comments section!