A crypto bear market is a market situation where there is a decline in trade movements. It also signifies a period where most people are selling off an asset or assets in the market.
This is usually a result of FUD (Fear, Uncertainty, and Doubt) in the market.
The opposite is a bull market which indicates an upward appreciation or trend in the market. It also occurs where more buyers are in the market, possibly due to optimism.
The recent bear market that crypto investors are experiencing this year is the pioneer with bitcoin going down to more than 50 percent of its all-time high. Alts are also being affected severely, with as many of them as Terra trading below $1.
However, does this mean that the market won’t recover? No, it does not.
The crypto bear market can be survived with the proper steps and principles discussed below.
Take time to learn more about cryptocurrency
Buying good crypto projects at a cheaper price than they would be in normal market conditions is always an option in a down market. When you purchase a cryptocurrency, you are making an investment in a blockchain corporation. Rather than researching the company and determining whether or not its business strategy is sound, many people place their bets on chance into ventures that are still in the early stages of development, hoping to become millionaires overnight.
Conducting a fundamental examination of the coin you plan to trade is the best approach to avoid a crypto bear market. It’s critical that you understand: What does this coin do? The cryptocurrencies, the management team’s, and the token economy’s future prospects.
Create a list of tokens you’d like to exchange based on these parameters. Always keep in mind that trading is an individual experience for which you must develop your own technique.
Avoid Panic Selling or Buying
It is common to have panic as a default response during any situation of unrest or uncertainty. However, you will be better positioned to make the right decision if you avoid panic responses in these situations.
The cryptocurrency market or any cannot be timed accurately, it is just predictions in most cases.
Before making a buy or sell decision, understanding what is going on and why things the cryptocurrency is dropping is very essential.
Make Use Of The DCA (dollar-cost averaging) Approach
Experienced crypto investors use this approach whenever the market is down in the red. This is an investment strategy whereby crypto traders budget the amount to be invested in the bear market and then make the investment in bits until the money is fully invested.
In other words, assuming that a crypto investor has $2000 to invest in a bear market, he can split it into $50 and invest them bit by bit. This is a good strategy because the market is highly volatile, and a crypto bull market can return at any moment. This allows you to avoid losing all of your money in a bear market while also being prepared for when the lights turn green.
Try Staking
During a down market, crypto investors are sometimes at a loss for what to do next to make money. Crypto staking is the process of storing your cryptocurrency in a blockchain for a period of time. This isn’t like traditional financial institutions, where you keep your money and don’t make any passive income.
Staking is a great method to get more exposure to a platform or asset you care about while also generating extra money.
Diversify Your Investments
The cryptocurrency market, just like the tech space, is vast. When you buy cryptocurrency, you are actually investing in a project, just like purchasing a Facebook stock or Apple Stock.
With diversification, the key is to understand that it is only on rare and challenging occasions that the whole crypto market gets into a bear situation. Rather than have all your investments in one aspect of crypto blockchain, you can invest some in crypto blockchains and companies building games, healthcare solutions, NFT marketplaces among others.
This enables you to balance out short-term value depreciation in investments, as seen in bear markets.
Do Not Leave Coins On Exchange
As you wait for the crypto bull market to return, don’t make the mistake of leaving your cryptocurrencies on just any exchange. There have been cases where crypto exchanges folded up during a bear market. Instances such as Cryptopia and QuadrigaCX. You can leave some funds in your crypto wallet address and keep some in cold wallets, so your cryptocurrencies are safe.
Play The Long Game
Once the crypto bull market is over, most people lose interest, especially newcomers. These are not the traits of folks who have a long-term view of the cryptocurrency market.
Cryptocurrency is a depreciating and appreciating digital asset. Those who have had the most success in the crypto world are those who have built up their portfolio while the market was down, rather than those who have quit during a down market.
Since the inception of cryptocurrency, the market has always experienced turbulence from time to time. In this period, investors usually make the most mistakes, and some build up vast amounts of money during the next bull run. What usually differentiates the losers from the winners is the actions they take. While many people act without proper guidance, the market winners follow these steps.
