This chart encourages investors to abandon their cryptocurrency. Should you?

Even for the biggest and best crypto assets, like Bitcoin (BTC +1.59%), Ethereum (ETH +5.05%), Solana (GROUND +4.17%)And XRP (XRP +5.68%)The flash crash of October 10 created a significant bitter feeling. And, as weakness in the crypto sector continues instead of easing in the weeks following the crash, fears are now growing, with many investors using a bad month as a referendum on the entire asset class. Discussions about abandoning crypto and rotating profits into stock index funds are loud and getting louder by the day.

So, without further ado, let’s take a look at the chart that’s causing crypto investors to abandon their holdings, and then we can evaluate whether this might be the right path for you or not.

This is the worst lens to use for a multi-year decision

Here is the 30-day performance of the crypto majors, compared to the performance of the stock market over the same period:

As you can see, the stock market has gained a bit, while the major cryptocurrencies are somewhere between dented and completely ruined (and it’s gotten mostly worse since I made this chart). Notably, it doesn’t matter whether it’s a store of value like Bitcoin, a smart contract platform like Ethereum or Solana, a utility coin like Chainlink, a coin intended for institutional finance like XRP, or even a meme coin like Dogecoin — everything is really going down. The disconnect between cryptos and the market is why people say it’s time to sell cryptos.

The flash crash was the immediate cause of this decline, and it is not surprising that a recovery did not occur immediately. Still, the biggest culprit is that the crash put the risk and volatility of the crypto sector in stark contrast to the stock market. Although the stock market crashes or enters bear markets from time to time, in crypto natives’ minds (and in reality) it is a much less risky and less volatile place to invest, and large sums of stable institutional capital are allocated to many of the biggest stocks.

But one month is not an investment horizon. Zoom out and the story becomes more nuanced. Stocks have risen over the past 12 months, but Bitcoin, Ethereum, XRP and Chainlink, among others, have outperformed the stock market over the same period, even including the recent turmoil.

Take a look:

SPY data by Y Charts

The 30-day divergence tells you more about the crypto sector and an eventful month than it does about crypto’s long-term return potential.

This means that even if the first chart is ugly, there is no reason to sell all your cryptocurrencies right now. Those who say it’s time to flee are panicked and therefore will not be mentally able to take advantage of this period of falling prices.

What would a calm head do now

The crypto market may continue to decline, or it may not. What the market does next matters less than your guide on how to manage it.

On this front, start by analyzing the investment theses for the assets you hold, particularly for Bitcoin, as well as other majors like Ethereum and Solana. If the thesis in favor of its ownership remains valid, it probably makes more sense to buy on the dip than to sell or stay away. For example, if you think Bitcoin’s scarcity will continue to increase due to its halving cycle – and, spoiler alert, it almost certainly will – a little short-term bearish price action is an opportunity rather than a threat to your portfolio in the long term.

Another thing to do right now is to foster leaders. Accumulating Bitcoin and perhaps Ethereum in the event of weakness remains reasonable; Solana and Chainlink are suitable for smaller posts. Most other altcoins remain structurally riskier with less persistent demand, and their prospects for long-term survival are currently in question, so don’t take unnecessary risks until this becomes clear.

The next step is to consider your risk tolerance and review the amount you have allocated to crypto assets. If this drop indicates that your allocation is too large for you to sleep soundly at night, act now to reduce your holdings to a level that you can maintain through the storms without flinching.

Finally, remember to use time as your advantage and not as an arbitrary constraint. Dollar cost average (DCA) your purchases rather than jumping into scary headlines in hopes of getting a cheaper entry point. If the October shock wears off, regular purchases will shine in due time. At the same time, don’t let the diversification of your portfolio slip away; It’s a great idea to own stock index funds if you don’t already.

A rise in stocks is not a reason to sell your crypto. Stay focused on the future, buy diligently and the rest will take care of itself.