Beginner’s Guide to Surviving a Bear Market
When starting the crypto journey, surviving the market lows may seem daunting but the right guide and research can get you through.
It has been a decade since Bitcoin was first introduced, and investors have learned that the crypto market can be highly volatile. Bull and bear markets have alternated over the years, and neither could be predicted or avoided. Many times, even the tiniest detail has been enough to transform a situation completely.
The Bull Run, which occurred about a year ago, was the most significant event in the history of cryptos pushing Bitcoin and several other altcoins to new highs. Those who bought into the bull run before it began made a killing. Those who invested when the price was high — lost it.
Before we start, let’s recap on what a Bear market is, if you don’t already know.
What’s a Bear market?
The term “bear market” refers to a time period in which prices fall. When prices begin to fall, traders panic about their positions and respond by selling off their positions, shorting the market, or taking other market exits, causing a domino effect to occur. During this time, many traders are “bearish,” which means that they expect prices to continue to fall before things start to improve again.
The recent Bitcoin downturn is not the first time crypto has experienced a bear market. For example, the industry had already endured crueler winters, such as those listed below:
- Bitcoin fell from $1,200 to $200 in 2014, losing as much as 86 percent of its value in the process.
- The price of Bitcoin fell from $20,000 to $3,000 in 2018.
- Bitcoin fell from $9,000 to $4,500 in a matter of days in March 2020, during the global pandemic-fueled market crash.
In light of this history, it is possible for cryptocurrency traders to ride out the bear market trends and position themselves in anticipation of a recovery. It is also feasible for market makers to benefit from a bear market, even if the market goes down. But how? Keep on reading.
Battling Bears the Right Way
These are a few ways investors can protect themselves from the impending bear market and retain more value in their portfolios.
1. Say no to ‘Shitcoins’
It will help if you rethink your positions and offerings when the market has been steadily declining for a long time. Altcoins with a high degree of volatility should be kept out of the central focus.
Many projects, such as meme coins and rebase projects, float through the crypto market as a new offering with no make-hold. Most of the token holders here are new to the market, and they lack a strong understanding of the market as well.
Investors should cut ties if things appear gimmicky with flashy marketing tactics and big promises. Reconsider the projects by opening your GitHub account to see if there is any activity and how many developers are working on it.
An alternative is to buy stable coins with the withdrawn funds. Stablecoins can be used to buy future dips.
2. Dollar-Cost Averaging — The not so average strategy
There’s a reason why bitcoiners are always talking about dollar-cost averaging. They rightly understand work and scarcity that cannot be matched.
Investors who use the Dollar-Cost Averaging (DCA) strategy divide their total investment into smaller, more frequent purchases in order to buy their desired asset. It reduces the overall purchase’s volatility impact. Making one lump-sum investment that doesn’t make sense in terms of asset pricing can also be avoided with this strategy.
In the crypto market, the DCA strategy is a great way to expose sound projects over time. If you’re going to use dollar-cost averaging, make sure the project you’re working on has a clear path forward, a supportive community, and an active development cycle. The bottom of a bear market cannot be predicted, and it is impossible to predict which of the 17000+ cryptocurrencies will recover first.
Use DCA to invest in a wide variety of crypto assets. This may reduce the size of your trades, but it will protect you from the overall risk of losing money. Exploring possible crypto assets is, of course, a time-consuming process requiring extensive research. However, it only serves to diversify your crypto investments.
It’s possible that you’ll need to conduct research based on:
- Previous all-time high: An overview of the asset’s potential can be found here.
- Past Performances: Tools like TradingView can help you analyze the crypto asset’s past performance and market acceptance.
- Upcoming announcements: Any significant roadmap changes or new project offerings.
In the volatile crypto market, a long-term perspective pays off. It’s always been considered a digital goldmine. Consider DCA to get rid of the pitfalls that come with the territory.
3. Staking it till you’re Making it
To protect your investments from the impending bear market, look for ways to diversify your portfolio. Instead of being afraid of the dwindling value of your assets and the unpredictability of the future, you should prepare for it with a well-thought-out strategy. Staking is a method for increasing your long-term profits while also ensuring your safety.
Staking is a method of securing a portion of a cryptocurrency’s value on the blockchain in order to generate a steady stream of income. Long-term investing can benefit significantly from this strategy because it is so simple yet so effective. It alleviates some of the stress of constantly checking the market and ranting about it.
The market has a variety of stake options right now, including CIN Staking on Coinsbit India. In addition, If you’re an Ether holder, you can stake your tokens on the blockchain for Eth2. Staking rewards can only be claimed once Eth2 is fully operational, so keep that in mind.
Other possibilities include Axie Infinity, a gaming protocol, and LooksRare, an NFT marketplace for staking. Staking is as simple as picking an excellent project to stake and then letting it sit there for a while.
4. Buy Till the Bears Die
It’s no secret that crypto investors have it tough in a bear market. However, adversity can bring about new possibilities. It’s a Warren Buffett quote that sums it up best: “Be fearful when others are greedy and greedy when others are fearful.”
Don’t freak out if the price begins to fall. A bear run can be seen as an opportunity to buy at a lower price and increase profits when you cash out during the following Bull Run.
For example, purchasing Bitcoin on December 7th, 2018, at a price of $3320 USD, was clearly a more profitable trade than buying Bitcoin on December 7th, 2021, at a price of $51,000 USD.
A bear market is an excellent time to invest in the stock market. Buying coins at a discount and holding them for the long term may provide you with a substantial profit (which the price history of BTC shows).
In addition to market sentiment, there are a number of other factors that can influence cryptocurrency prices. The market has seen a lot of volatility in the past. You should only invest what you can afford. Be cautious about making hasty decisions that could end up costing both you and your company money.
Interested in starting your crypto investing journey? Coinsbit India is a great place to get started in the cryptocurrency world in just a matter of minutes. So, why wait?
About Coinsbit India
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Disclaimer: Crypto assets are volatile, and investments in them are risky. We advise you to do thorough research before investing.