Before the weekend started and stock markets closed on Friday, January 21, 2022, there was a massive cryptocurrency sell-off that led to an over $1 Trillion dollar drop in all cryptocurrencies.

The top four cryptocurrencies and smart contract tokens by market cap are Bitcoin, Ethereum, Cardano, Solana–when we rule out decentralized indexes like Binance Coin (BNB), and stablecoins like Tether (USDT), and USD Coin (USDC). You can get the full cryptocurrency list here for more.

As we kick off the New Year with a lot of our wealth shed, you should keep in mind that you don’t actually lose until you decide to sell. Chances are, the crypto you bought is part of a long-term project (unless it’s a meme coin like Dogecoin or Shiba Inu), which means that you need to hold tight. Let me explain why crypto crashed, alongside some considerations, and then finally what to do when cryptocurrencies and tokens crash with time-tested investing principles from billionaire hedge fund manager Ray Dalio.

Why did crypto crash today? Here’s what caused the crypto crash in January 2022

According to Investopedia, ‘the concept of liquidity has many facets, and they influence the price of Bitcoin’ and that of other cryptocurrencies. Take this scenario: someone goes to buy a car with Bitcoin, and they go into the dealership that doesn’t accept Bitcoin so they need to turn their Bitcoin into liquid cash. This has an impact on Bitcoin, because it will affect the entire market if a million people try to do this.

Got it? I hope so. Alongside liquidity, then there has been a recent stock market crash. And many savvy investors have also gotten into cryptocurrency investing. So chances are, they might decide to sell off their crypto if stock markets crash, but this is not directly correlated to crypto crashing, so we can leave this as a consideration only.

Next, when crypto crashes, and hundreds of thousands of active investors see this and decide to panic-sell based on their emotions, they cause it to go down even more. This is not good for all of us, but in short-term trading, panic-selling and liquidity factors can mean going down double-digit points, like 30% which is normal volatility for cryptocurrency and shouldn’t actually be considered a massive crash, because cryptos are inherently volatile.

As a side note, was hacked and lost $30M in mostly Bitcoin and Ethereum on Jan 21, 2022, as well. This likely didn’t affect the market all that much but is noteworthy.

Ok then. Now here’s what to do when crypto crashes.

As macro-investor Ray Dalio says, when there is blood in the street it’s time to buy, and if you are an active investor you should go against your emotions and don’t fucking panic sell.

Buying when there’s blood in the street, which basically means when crypto takes a dump and crashes, it’s actually a massive opportunity to buy more at a firesale. This is an opportunity to be calm when there’s a crash like this one, and to increase your positions or further diversify your portfolio. Either way, the worst thing you can possibly do is to sell off in a panic.

Wishing you and my portfolio the best of luck y’all, hang in there and hold on to your pants as we go on a rollercoaster of a ride that is crypto investing.

Got it. I’m not going to panic sell because this is a long-term commitment.

In the meantime, you might also be interested in watching this new crypto documentary ‘Cryptopia’ that speaks more to the long-term technical innovations coming about in the blockchain and cryptocurrency space.

If you have any interest, you can scan Twitter feeds, or check out Google Trends to see what fellow crypto investors and the masses are searching for on Google, which shows a breakout 450% increase in searches for ‘will Ethereum recover’, ‘will.

And here are searches about ‘crypto crash’ from the last 24 hours, and is updated by Google:

Regarding predictions, you can see Reddit prediction polls here, or what people are searching Google for lots of that, which is a positive signal that more people will be buying crypto and thus, the prices will soon increase. More below on related search queries to some of the top cryptocurrencies.