Watching the coins in your account go from profit to loss, from shallow to deep traps, I understand that anxiety all too well — in the bear market of 2022, my SOL dropped from $120 to $15, and I almost lost all my principal by stubbornly holding and blindly averaging down.
Later, I relied on 5 strategies to break free from losses. Not only did I recover my losses, but I also made a 30% profit during the rebound. The cryptocurrency market is highly volatile, and being trapped is not scary; choosing the right method can help you get out of trouble. Today, I'll share effective active and passive strategies for breaking free.
Active breaking free: Don’t stubbornly hold; use strategies to regain initiative.
After being trapped, the worst thing is to "play dead and do nothing"; taking proactive action is the way to get out of trouble faster. These three strategies are suitable for situations with a certain operational space, focusing on "protecting principal, changing sectors, reducing costs".
1. Cut losses promptly: Keep the principal, and don’t fear the lack of opportunities.
In 2021, after chasing high and buying a certain altcoin, when it dropped from $8 to $5, I was still waiting for a rebound, but it fell all the way to $0.5, losing 90% of my principal. Later, I realized: buying high in the wrong coin is incorrect; cutting losses promptly is more important than stubbornly holding.
Operational standard: If the price drops below a key support level (such as the weekly MA30) after buying, or if a single coin loses more than 20%, decisively cut losses and exit. Don’t think "it has dropped so much, it will rebound"; junk coins dropping 90% is common, and preserving the principal allows you to seize the next opportunity. Last year, after cutting losses on a MEME coin, I used the remaining funds to buy ETH and made back my losses in three months.
2. Change positions to survive: Turn dead money into active money.
If the coins in your hands are continuously sluggish while other sectors start to gain momentum, changing positions is an effective way to break free. However, changing positions should not be random; follow the principle of "strong to weak": swap underperforming coins for leading ones in the same sector, or potential coins that are receiving investment.
Case study: In 2023, I held a certain Layer 2 token that was moving sideways, while ARB started to surge. I decisively swapped half of my position for ARB and made a 25% profit in two weeks, using the new profits to offset the old losses. The key to changing positions: don’t change positions during a decline (the more you change, the more you lose), wait until the rebound stabilizes before acting, and the new coin must have clear signs of an upward trend (such as volume breakout, favorable news landing).
3. Operate in batches: Sell high and buy low to reduce costs.
Deeply trapped (losses over 40%) and the coin price is still falling? Try the "inverse pyramid reduction method": first sell 30% of your position, wait for a 10%-15% drop, then buy back, repeating the operation to lower costs. This method is suitable for a volatile downward market, relying on wave price differences to dilute losses.
I used this method to break free from BTC: when it dropped from $40,000 to $30,000, I first sold 20% of my position, bought back when it fell to $27,000, reducing my cost from $40,000 to $38,000; then I sold 10% when it dropped to $25,000, bought back when it rebounded to $28,000, reducing my cost to $35,000. After three operations, I initially needed a 30% increase to break free, but in the end, only a 15% rise was required to recover. Note: Each buy-sell interval should have at least a 5% drop, and reserve 30% of funds to prevent missing out.
Passive breaking free: No bullets? Rely on patience and rhythm to endure.
If you are fully trapped with no funds to average down, or do not want to cut losses, these two strategies can help you reduce pain and wait for a recovery opportunity. The core is "do not blindly average down; use time to exchange for space".
1. Gradually average down: Average down at low levels to dilute costs.
If you are trapped at a relatively low level (e.g., mainstream coins dropped more than 50%) and are optimistic about the long-term trend, you can average down in batches at key support levels. But remember: each averaging down should not exceed 10% of the total position, and you must wait for stop-loss signals (such as volume rebounds, bottoming sideways).
In 2022, when ETH fell from $4,000 to $880, I increased my position in three steps: 10% at $880, 10% at $1,000, and 10% at $1,200. My original cost of $4,000 was reduced to $2,800 after averaging down. When ETH rose to $2,000 in 2023, I broke free. Avoid "averaging down all at once"; if it continues to fall, it will deepen your losses.
2. Long-term holding: Use idle funds to wait for cycles.
Fully trapped with no funds to average down? Then don’t watch the market; use time to exchange for opportunities. But the premise is: you hold mainstream coins (like BTC/ETH), and you are using idle funds that have not been used for over 3 years.
The BTC I was trapped in 2018 dropped from $20,000 to $3,000. At that time, I neither cut losses nor had funds to average down, so I just left it alone. When the bull market rose to $60,000 in 2021, I not only broke free but also made a 2x profit. However, this strategy must not be used on altcoins — 90% of altcoins will only go to zero after being trapped; only mainstream coins have the opportunity for cyclical rebounds.
Guide to avoiding pitfalls when breaking free: Avoid these 3 mistakes at all costs.
After being trapped, it’s easy for your mindset to collapse. These mistakes will make you sink deeper, so be vigilant:
❌ Don’t "stubbornly hold without cutting losses": Don’t fantasize about rebounds after being trapped by junk coins; if you don’t cut losses when you should, you’ll end up losing even the principal for recovery.
❌ Don’t "blindly average down": Averaging down in a downtrend equals "giving bullets to the decline"; you must wait for clear signals of stopping the decline before acting.
❌ Don’t "emotionally change positions": Changing positions randomly because you see others' coins rising will result in old coins breaking free while new coins get trapped, leading to a vicious cycle.
Finally, I want to say: the core of breaking free is "survive first".
Being trapped is not scary; what’s scary is chaotic operations after being trapped. Active breaking free is suitable for situations with operational space, focusing on "protecting principal, seizing opportunities"; passive breaking free is suitable for situations without funds, focusing on "choosing the right targets, enduring the cycle".
Remember: there is no universal method to break free; strategies must be chosen based on the degree of being trapped (lightly trapped / deeply trapped), the quality of the coin (mainstream / altcoin), and the financial situation (having spare cash / not having bullets). Stay calm and do not make impulsive decisions; breaking free is just a matter of time.
If you are currently trapped, it might be helpful to review these 5 strategies and find the one that suits you best. Stay tuned for the "Trapped Position Calculation Table" and "Stop Loss Signal Judgment Techniques" to help you break free more accurately and recover.