Recently, I recalled the black swan events in cryptocurrency history—those devastating shocks that no one could predict. They occur rarely, but when they do, the economic impact is incredibly severe.

One thing many people don’t realize: traditional risk models are completely powerless against these events. Why? Because they rely on historical data, while black swan events are things that have never happened before. They are beyond any statistical forecast.

There are three main characteristics of black swan events: extremely hard to predict, serious consequences, and after they happen, everyone can explain the cause. But by then, it’s too late.

Looking back at history, I see FTX as a typical example. This exchange is believed to have used customer funds for personal trading. When the news broke, people rushed to withdraw their money, and the market collapsed. To this day, FTX still owes billions of dollars to users. That was a huge shock to confidence in the cryptocurrency market.

Or Mt. Gox—the biggest Bitcoin theft in history. In 2014, the largest exchange in the world at that time was hacked, losing 850,000 Bitcoin and then declaring bankruptcy. At that time, Mt. Gox held over 80% of the market share, so most Bitcoin holders were affected. Even after many years, the impact persists, and claims for compensation are still filed almost annually.

There’s another event I can’t forget: the COVID-19 pandemic. Bitcoin dropped 50% in just one day, and the total cryptocurrency market capitalization fell 40%. That’s when people realized that cryptocurrencies are not an entirely safe haven.

So, how can we prepare for black swan events? Actually, although they can’t be predicted, you can still minimize losses. First, diversify your portfolio—don’t put 100% of your money into cryptocurrencies. Some smart traders always keep a portion in cash as “reserve funds,” ready to seize opportunities when prices drop sharply.

Second, self-custody at least part of your crypto holdings. This reduces risk if an exchange gets compromised. Third, when a black swan event occurs, don’t try to time the market. Identifying the “bottom” is nearly impossible, and attempting to do so only leads to further losses.

But if you have a long-term strategy, you can still act wisely. Dollar-cost averaging into solid assets like Bitcoin or Ethereum can be a good way to smooth out volatility as the market recovers.

Most importantly, stay calm. How you handle these black swan events will determine whether you survive the storm or become one of the victims. Understanding their nature, implementing strict risk management, diversifying across multiple markets, and always keeping some cash in your portfolio—that’s the smart way to face these unpredictable shocks.