Part 3 of 12 in the Crypto Survival Guide Series
Let’s talk about the emotional roller coaster that is holding crypto through a downturn.
Not the sanitized “be greedy when others are fearful” Warren Buffett cosplay version. The real version—where you check prices at 2 AM, negotiate with yourself about cutting losses, and occasionally wonder if this whole thing was just an expensive way to learn humility.
The Universal Stages of Crypto Psychology
If you’ve been in crypto for more than a few months, you’ve probably experienced some version of this progression:
Stage 1: Overconfidence
“I’ve figured this out. These returns are incredible. Why doesn’t everyone do this?”
You’ve found your edge. You’ve discovered liquidity pools or staking or some strategy that’s printing money. The APYs are real. The fees are accumulating. You’re basically a financial genius.
Stage 2: Confusion
“Wait, why are my numbers going down when I’m earning fees?”
Something’s not working the way you expected. Your LP went out of range. Your tokens dropped. The math that looked so good on paper is somehow producing red numbers in reality.
Stage 3: Panic
“Should I exit? Should I double down? Should I have listened to literally anyone who warned me about this?”
You’re checking prices constantly. Every Discord message feels urgent. Every Twitter thread promises to explain what’s happening. None of it helps.
Stage 4: Negotiation
“If it just gets back to my entry price, I promise I’ll sell and never do this again.”
You’re making deals with the crypto gods. You’ll be smarter next time. You’ll be more conservative. You’ll definitely not do this exact thing again. (Narrator: He would, in fact, consider doing this exact thing again.)
Stage 5: Acceptance
“Okay, this is where I am. Checking prices every hour doesn’t change anything. What do I actually control here?”
You stop fighting reality and start working with it. Not giving up—just getting strategic about what’s actually within your power.
Most people get stuck somewhere between Stage 3 and Stage 4 for months.
My Specific Journey (Featuring Poor Decisions and Learning)
I didn’t start with crypto. I started with algo trading bots.
If you’ve never experienced an algorithmic trading bot that uses martingale strategies, let me paint you a picture: it’s like watching your account balance play chicken with zero, and zero doesn’t blink.
Over about 8 months in 2024, I lost roughly 1/3 of my “bot money” across two different bots. One of the losses was compounded by connectivity issues where the bot didn’t receive the trade signals it was supposed to because of platform problems.
But the real low point? June 2024.
My wife and I took a 2-week cruise. I had internet access on the boat, but the bot was doing… non-relaxing things. I had my wife check the bot’s trades once a day. Eventually, the bot cleaned things up. But it made something that should have been very relaxing much less so.
Then, within a month of getting home, the second bot blew up entirely.
We were visiting my wife’s family when it happened. It took me a couple days to recover emotionally. I lost sleep. I couldn’t casually explain my mood away as “nothing.”
Enter liquidity pools.
LPs seemed like the answer. The bot could get over-leveraged and I couldn’t pull money out until it unwound trades—unless I wanted to blow up the account. At least with crypto/LPs, I could exit and “have what I have.”
During the coaching program I started in November 2024, it was presented as being “safe if you stay within the guardrails.”
It may still be safe. But the “out of range” reality is something nobody has a crystal ball to predict.
The Evolution: From Obsessive to Strategic
Here’s what changed for me:
I stopped checking prices constantly.
Not because I stopped caring. Not because I’d “let go” or achieved some zen state of crypto enlightenment. But because I realized something simple:
Checking prices frequently doesn’t give me actionable information.
My crypto has value. It’s less than I started with, but the account won’t blow up entirely. Blue-chip cryptos won’t lose complete value. And obsessing over daily (or hourly) fluctuations doesn’t change the outcome—it just creates anxiety.
So now I keep track of ETH.
That’s it. That’s my barometer.
I know the other tokens will generally follow ETH back up when the market recovers. Will they reach the heights I originally hoped for? Probably not. But I’ve adjusted my expectations. I’ll settle for less now than I would have before.
And you know what? That acceptance removed most of the stress.
The “Never More Than You Can Afford to Lose” Baseline
There’s a reason that phrase gets repeated endlessly in crypto communities, even though it sounds patronizing.
It’s because knowing—really knowing—that you won’t be financially destroyed if everything goes to zero fundamentally changes how you experience downturns.
Between algo bots and crypto, I’m at about 5% of my total investment portfolio.
That wasn’t a sophisticated strategy. It was just a boundary I set early on: “This is the fun money. The experimental bucket. The part where I can try things without risking the retirement plan.”
And I am so grateful I kept it at 5%.
Because here’s what would be different if I hadn’t:
If crypto was 20% of my portfolio:
I wouldn’t just be frustrated. I’d be panicking. The conversations with my wife wouldn’t be awkward—they’d be serious discussions about our financial future.
If crypto was 50% of my portfolio:
I don’t even want to think about it. The mental health toll. The relationship strain. The desperate hope that “it has to come back” because the alternative is unthinkable.
The 5% allocation gave me permission to learn, experiment, lose, and survive.
That baseline keeps the stress from becoming something worse.
What Actually Helps (And What Doesn’t)
Doesn’t help:
- Checking prices every hour
- Reading every bearish (or bullish) take on Twitter
- Trying to time the exact bottom
- Beating yourself up for past decisions
- Comparing your portfolio to where it was at the peak
Does help:
- Tracking one or two key indicators (like ETH) instead of everything
- Accepting where you are without pretending it’s fine
- Adjusting expectations based on reality, not hope
- Having clear boundaries about what you can afford to lose
- Giving yourself permission to step back when obsessing isn’t productive
The Internal Monologue Nobody Admits
Some days, I promise myself I’ll quit all bots and crypto entirely if I can just survive until things recover.
Is that real? Or is it just talk?
Honestly, I don’t know yet.
Maybe I’ll hit my recovery point, cash out, and walk away satisfied that I learned something expensive but valuable. Maybe I’ll take what I learned from this cycle and approach the next one smarter, with better strategies and realistic expectations.
Both options are valid. Neither one is “giving up” or “failing.”
The psychology of holding isn’t about forcing conviction you don’t feel. It’s about being honest with yourself about why you’re holding, what you’re hoping for, and what you’ll do when (or if) that moment arrives.
The Algo Bot to Crypto Arc
Looking back, the journey makes sense:
Algo bots taught me:
- How quickly things can go wrong
- What it feels like to lose control
- The importance of being able to exit
- That my wife wouldn’t leave me over financial mistakes
Crypto promised:
- More control (I can exit anytime)
- Less leverage risk
- “Safer” strategies within guardrails
- A way to recover from bot losses
Crypto delivered:
- Some control (but positions can still freeze)
- Different risks (out of range, token depreciation)
- Strategies that work until they don’t
- Lessons that cost money but build resilience
I’m not saying crypto is better or worse than bots. I’m saying they’re both harder than they look, and both require more emotional management than I expected.
The difference is that with crypto, I can exit. With the bots, I was trapped until they unwound.
That control—even if it’s just psychological—matters.
Up Next: In Part 4, we’ll dig into the difference between conviction and hope—specifically, how to tell if you’re holding because you believe in something or because you’re just too far down to sell. We’ll also talk about setting rules for yourself when the market tests your patience.
