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

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The crypto space is known for its large swings and ups and downs. Still, the 2022 crash looks tougher and more unpredictable than previous bear markets. Still, there are ways for investors to protect their crypto assets and keep them safe despite turbulent times.

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

Why did crypto crash in 2022?

The underlying processes that determine a market’s performance are numerous and often interconnected, leaving analysts with the daunting task of unraveling what went wrong. However, 2022 turned out to be one of the toughest years for the crypto industry to date.

Starting with the Terra LUNA fiasco earlier this year, the fate of stablecoins was first tested. Moreover, in the months that followed, we saw large corporations and venture capitalists collapse. Wallet provider Celsius filed for bankruptcy, locking up client assets, while hedge fund Three Arrows Capital also defaulted, with its founders in hiding.

More recently, we saw centralized exchange FTX collapse as it was revealed that the exchange had been embezzling customer funds for years and hackers had managed to empty its wallets, leaving thousands of users with empty wallets. The combination of these significant events and additional global economic pressure has left the crypto space in a twist.

Despite this, activity has remained strong, and traders and crypto enthusiasts are still keeping a close eye on their portfolios. One of the most important things investors can do during downturns is monitor their portfolio and take the necessary steps to protect their investment.

Automation can help you limit losses during the crypto crash

Whatever your investment strategy, limiting potential losses is crucial, especially during bear markets. With the advancement of trading robots 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 since the crypto market is live non-stop, 365 days a year. Turbulence can occur at any time, so using automation mechanisms such as stop-loss limits can help you avoid unnecessary risk. A stop-loss limit allows you to set an automatic sell trigger that activates when a specific asset in your portfolio reaches a specified value that you are not comfortable with.

Let’s take this hypothetical scenario as an example. Your wallet consists of 32 ETH, which you bought at $1,000 per token. Since the date of purchase, the valuation of the cryptocurrency has increased 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 that will liquidate your ETH holdings at a price you determine. Setting the stop-loss to $1,050 per token will always guarantee you a profit, and you won’t have to think about watching the market continuously. Your wallet value does not drop and your ETH sale was automatically triggered before the token price dropped even further.

Of course, this just illustrates what stop-loss automation can do. Products like the TradeSanta trading bot offer much more complex tools that can be applied to your trading experience. It is important to manage risk through stop-loss, trailing stop-loss or get the best entry point using MACD, RSI, Bollinger technical indicators and TradingView stop signals. A DCA strategy involves dividing your reserve funds into smaller chunks and buying with smaller amounts each time the asset price drops. And other automated processes can save you a lot of headaches in these turbulent times.

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

To learn more about TradeSanta, check out the helpful links below:

Disclaimer. Cointelegraph does not endorse any content or product on this page. Although we aim to provide you with all important information we may obtain, readers should do their own research before taking any action related to the company and take full responsibility for their decisions, and this article cannot no longer be considered as investment advice.

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