2022 had been a hell of a crypto crash. Big crypto exchanges and lenders like FTX, Celsius, and BlockFi filed for bankruptcy. Terra Luna and its stablecoin collapsed while many altcoins are down by more than 90% compared to the previous all-time highs.

In other words, this year had been extremely expensive so far. I may have lost a lot of money but I could gain some valuable knowledge.

Here are the TOP 5 lessons learned from the current crypto crash.

1. Stay Critical and Question Everything

It is important to stay critical and to ask the right questions. Don’t believe everything that is said by politicians or billionaires, what is written in the newspapers, and what is tweeted on Twitter.

Really, question everything and don’t believe anyone in crypto, also don’t believe me.

No need to become totally paranoid but ask questions like, “Is this stablecoin really stable?”, “Is this decentralized protocol really decentralized?”, or “Can this billionaire really be an altruist?”

It is important to ask the right questions. Don’t take things for granted because otherwise, you might get seduced by fraudsters or simply bad investments.

2. Don’t get Greedy

There is this fear and greed index that indicates the sentiment of the markets. Fear and greed are the two emotions that are driving the markets. Both are dangerous.

The feeling of greed is especially prevalent during bull markets. People start looking for APYs that are higher and higher and in the end, they go all in with their stablecoins on Terra Luna because they were providing the highest interest rates on stablecoins.

Greedy people tend to go all in on risky stuff and they are also more likely to fall for scams.

3. Liquidity Matters

Especially the complex around FTX has shown how important liquidity is. You should always be able to pay your bills.

If you have all your savings frozen in financial products then you are not prepared for unexpected bills. Also, when you look at Terra Luna, liquidity can disappear quickly when you have all your capital in just one asset, no matter if Bitcoin, altcoin, stablecoin, or fiat.

Fiat can be eaten by hyperinflation and when it comes to cryptocurrencies, you know the drill. Imagine you only have Bitcoins now but an urgent bill to pay then you are forced to sell them at bad prices.

In the end, staying liquid is more important than finding the next low-market-cap gem to invest in.

4. Personality Cults Are Dangerous

People tend to look for leaders, for someone who knows what is true and what is false. Somehow this is human nature and the cryptocurrency space is no exception.

Everyone in crypto talks about decentralization, at the same time personality cults are also very established in the cryptocurrency space.

This frequently leads to disasters like in the cases of Sam Bankman Fried or Do Kwon. That personality cults are dangerous should have been an important lesson of the current crypto crash but nevertheless, the personality cult goes on.

This leader cult is understandable as it is human nature but it should be questioned because it frequently leads to catastrophes.

5. There Are Also Winners

During bear markets, the market participants are focusing on negative news like the Terra Luna or FTX collapse and tend to oversee that there are also winners.

In every crisis, there are also winners, someone who can profit from disruptive times. In most cases, we know the winners of the crisis when the markets have turned.

One big winner of the current crypto crisis can already be named today and this is Binance. With each bear market, Binance managed to grow bigger and bigger. Today, Binance has become the biggest cryptocurrency exchange with the highest trading volume by far.

Binance also managed to get its feet into other important niches of the crypto industry from Trust Wallet, and CoinMarketCap to Binance.

When you see the winners of the crisis, it helps you to stay optimistic and become a winner of the crisis yourself despite all the misery there is.

My Final Conclusion

These were the five biggest lessons that the bear market 2022 has taught me.

You may have missed the “Not your keys, not your coins” lesson. It is indeed an important lesson and I instantly hope that everyone already knows this lesson. I also think that this phrase misses out on the dangers that come with self-custody. For example, when you lose your keys or your wallet gets compromised then your crypto is also gone.

However, I am also interested in what you have learned from this bear market. It would be awesome if you could leave a comment.

Thank you for reading and if this is the kind of stuff you like to read, I would be happy about a follow.

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