What to Do When the Crypto Market Falls: A Plan Written in Advance

Sharp falls are not an anomaly in crypto; they are a feature of the asset class. Drops of thirty per cent within a cycle are routine and drawdowns of seventy per cent or more have occurred in every cycle so far. If your plan only works when prices rise, you do not have a plan — you have a hope with a portfolio attached.

The first thing to do during a fall is nothing, for at least a day. The urge to act is strongest exactly when information is worst. Prices during a cascade are driven by forced liquidations rather than by anyone's considered view, and the people selling at the bottom are overwhelmingly those who acted within the first hour.

Then check three things, in this order. Your own liquidity: do you need this money in the next few years? Your leverage: are you borrowing, directly or through a platform feature you did not think of as borrowing? And custody: is anything sitting on a platform showing withdrawal delays or unusual notices? Solvency problems tend to surface during falls, and moving assets you control off a wobbling platform is one of the few urgent actions that is genuinely urgent.

Next, separate price falls from thesis failures. A market-wide drop because rates rose or a large fund unwound says nothing about whether the asset you own is still worth owning. A fall caused by the specific project being exploited, delisted, or abandoned by its developers says a great deal. The first is noise you were always going to have to sit through; the second is new information, and selling on new information is rational rather than panicky.

Selling is a legitimate decision in three cases: the position is larger than you can live with, you need the money for something real, or the reason you bought no longer holds. It is a poor decision when the only input is the colour of the chart. Write those three cases down now, while nothing is happening, and read them later.

Buying more can be reasonable too, but only within limits set in advance. Never borrow to average down. Never break the cap you set on how much of your total savings belongs in crypto. If you intend to buy dips, decide the amounts and the thresholds while you are calm, or keep using your regular schedule and let it do the work quietly.

There is one genuine opportunity in a fall for many investors: tax-loss harvesting, where realising a loss can offset gains elsewhere. Rules differ sharply by country and some have wash-sale restrictions, so check your own tax authority's guidance rather than a forum post.

Finally, manage the inputs. Reduce how often you look. Mute the accounts that thrive on drama in both directions. Keep a short written log of what you did and why, which does more for your future decisions than any indicator. The goal is not to predict the bottom. It is to still be holding a position you understand when the market eventually stops falling.