What to do when the crypto market drops

TL;DR: When crypto drops, most holders face four options: sell, hold, buy more, or borrow against what they have. The right choice depends on one question that comes before all the others: do you actually need this money in the next 12 months? If no, selling during a downturn is almost never the optimal decision. Nexo's crypto-backed credit line offers a fifth path most holders don't know exists: access liquidity without selling your position.

The first question: do you need this money in the next 12 months?

Not "would it be useful." Not "would I feel better in cash." Do you have a specific, near-term financial obligation this money needs to cover?

If yes: sell. No framework changes that. The purpose of keeping an emergency fund separate from crypto is exactly this situation.

If no: selling during a downturn is almost never the optimal decision. The rest of this framework is for people in that second category.

The four-option framework

Option 1: Do nothing

Doing nothing is an active decision. It means you've confirmed your thesis is intact and that holding through the volatility is the right call.

This is correct more often than people realise. Bitcoin fell 83% between November 2021 and November 2022, recovering to a new all-time high of $125,071 in October 2025. Ethereum fell 81% over the same period and also recovered. As of April 2026, Bitcoin is again in a drawdown phase, down approximately 38% from that October peak.

Every major crypto asset that has survived its first five years has recovered from even its worst drawdowns. The question to ask before choosing this option: has anything changed about the reason you originally bought? If the answer is no, the fundamentals are intact, the thesis is unchanged. Doing nothing is a defensible and often optimal choice.

Option 2: Buy more

Dollar-cost averaging into a declining market means buying a fixed amount at regular intervals regardless of price. Over time, this lowers your average cost basis and increases your exposure at lower prices.

This only makes sense if two conditions are met: you have conviction in the long-term thesis, and you have capital available that isn't needed elsewhere. Buying more by stretching your financial position converts a calculated strategy into a dangerous one.

Option 3: Earn on what you hold

If you're holding through a downturn, your crypto can work for you while you wait. Flexible Savings on Nexo earns daily interest on Bitcoin, Ethereum, and stablecoins with no lock-up, meaning you retain full access to your funds while generating a return.

For stablecoin holders specifically, a downturn is often the moment when earning makes the most sense. Moving a portion of your portfolio into USDC or USDT eliminates price exposure while generating yield above most bank savings accounts. When the market recovers, you can move back into the assets you want to hold.

Option 4: Borrow against your holdings

If you need liquidity but don't want to sell, a crypto-backed credit line lets you access cash or stablecoins using your Bitcoin or Ethereum as collateral. Your crypto stays in your account. When you repay, your holdings are fully unlocked.

The strategic logic is the same wealthy investors have used with real estate and equities for generations: borrow against appreciating assets rather than selling them. Strategy (formerly MicroStrategy), which held approximately 528,185 BTC as of April 2026, has operated on this principle at scale, using convertible debt to accumulate Bitcoin rather than selling holdings to fund operations. The same logic applies at an individual level. The cost of borrowing from 2.9% annual interest on Nexo for eligible clients is often lower than the opportunity cost of selling at a depressed price and missing the recovery.

Monitor your loan-to-value ratio. If the value of your collateral falls further, your LTV rises. If it reaches a threshold, you may need to add more collateral or repay part of the loan. Borrow conservatively and have a clear repayment plan.

What not to do

Don't sell because the price is falling. Price falling is not, by itself, a reason to sell. The question is whether your thesis has changed. If the answer is no, a falling price is noise.

Don't add to a position you can't afford to hold. Buying more with credit cards, personal loans, or money earmarked for near-term expenses converts a strategic decision into a financial risk.

Don't move to stablecoins without a re-entry plan. Most holders who move to cash during a downturn either re-enter too late or stay out entirely and miss the next cycle. If you don't have a specific plan for when and how you'll re-enter, staying in your original position is probably the better decision.

Wait 48 hours before making any irreversible decision. Most of the urgency you feel during a sharp downturn is emotional. Selling is difficult to reverse at the same price. If you're feeling acute pressure to act, wait.

Explore your options on Nexo

During a downturn, your crypto can still work for you. Flexible Savings earns daily interest on Bitcoin, Ethereum, and stablecoins with no lock-up. Fixed-term Savings offers higher rates for committed periods. And if you need liquidity without selling, Nexo's crypto-backed credit line gives you access to funds from 2.9% annual interest, with your crypto staying in your account as collateral.

Frequently asked questions

Should I sell my crypto when the market drops? Only if you genuinely need the money for a near-term obligation and have no other way to cover it. If that's not the case, selling during a downturn means locking in a loss and potentially missing the recovery.

What is dollar-cost averaging in crypto? DCA means buying a fixed amount at regular intervals regardless of price. During a downturn, you buy more units for the same money, lowering your average cost basis over time. It works best for investors with a long time horizon and consistent capital available.

Can I borrow against my crypto instead of selling during a drop? Yes. A crypto-backed credit line lets you use your Bitcoin or Ethereum as collateral to access cash without selling your position. On Nexo, borrowing starts from 1.9% annual interest for eligible clients.

What is LTV in crypto borrowing? LTV measures how much you've borrowed relative to the value of your collateral. If Bitcoin's price falls, your LTV rises. If it exceeds the platform's threshold, you'll need to add collateral or repay part of the loan. That's why borrowing conservatively matters most during volatile periods.