Have you ever wondered what to do when cryptocurrency prices start to fall drastically? Maybe you fix or join those who think it’s the end of crypto. Such massive price falls are not new; they happen in all financial markets. It is usually a period where the market relaxes after a long period of upward movement.
We will quickly explain what these massive downturns – known as bear markets – are and what you can do to survive them.
What is a Bear Crypto Market?
A bear crypto market refers to strong market sales characterized by a significant price decline over a long period of time. It is a period when supply exceeds demand, leading to falling prices and low investor confidence.
Investors with pessimistic prospects, who expect the market price to continue to fall, are referred to as bears. Trading in the bear market can be challenging, especially for traders with little or no previous expertise.
The bear market takes place not only in the crypto area, but also in the traditional markets such as forex, stocks, real estate, bonds, etc. However, bear markets in crypto are usually more volatile than traditional markets. This may be due to the fact that the crypto area is still relatively new and not as established as traditional markets.
Causes and characteristics of a crypto bear market
A bear market can continue for several years or just a few weeks. It usually starts when investors start losing confidence in an asset (due to various factors) and start selling their holdings. As the price of the asset falls, more investors will begin to withdraw from their investments.
Although it is not entirely clear what causes a crypto bear market, factors such as low trading volume, negative sentiments from, among others, the government and the traditional financial system, and regulatory restrictions, have played a role in triggering it.
A bear crypto market is usually characterized by negative views of crypto on social media, higher supply than demand for crypto and distrust of cryptocurrency in traditional finance. All of these and more are beginning to cause investors to lose confidence; hence the sustained price decline.
6 Ways to Survive the Bear Crypto Market
It is important to know some steps you can take to survive in a bear crypto market. So let’s quickly consider some of them.
1. Don’t get emotional
Whether you see the crypto bear market as an opportunity to buy a token at a low price or the falling price makes you uncomfortable, try to stay calm and not make emotional decisions. Emotional decisions often lead to remorse.
The bear market tests investors’ patience and perseverance; it can even make many people avoid crypto altogether. However, you should never forget that bear markets do not last forever. The beef races that follow usually surpass the bear markets. As a result, you need to master your trading psychology so that you do not make decisions out of fear or doubt.
2. Diversify your portfolio
Portfolio diversification is important to ensure volatility. You need to spread your portfolio across different cryptocurrencies. You can also explore other options for cryptocurrency earnings as a bet. Effort is an easy way to build your portfolio – it protects you from the effects of daily price fluctuations.
Buying reliable stack coins is also a good idea. Although stack coins usually do not make a significant profit, there is something in us that feels fulfilled when we know we have money stored somewhere. You can also join projects within a growing crypto ecosystem. It is worth considering projects that can make you earn through efforts, loans and airdrops.
3. Dollar Cost Average (DCA)
Instead of investing your money at once, you can invest in small incremental amounts over time. This way, you will benefit from market downturns without risking too much of your capital. For example, if you have an annual goal of investing $ 2000 in Bitcoin (BTC), you can invest around $ 166 monthly or divide it into weekly or daily contributions.
Investing small amounts at different prices will save you the hassle of trying to time the market for bottoms or searching for the best prices for trading listings. DCA is the best practice for investing slowly and consistently. It also keeps you from the risk of trying to get everything at once.
4. Buy Dip
Buying a dip means buying at a low price to take advantage of the falling price. The idea is that the falling price will recover at some point, and open up new profit potential.
As much as buying dip is common at a bear market, try not to buy too early. It is better to buy when most people have sold their holdings in fear. One of the ways to handle this can be to buy in small pieces, as in DCA, and also use price action and technical indicators to get the best listings.
5. Find the best entry points
You can always find good entry points in a bear market by relying on a combination of tools and indicators. This method is useful for traders who are looking to make money fast.
Indicators such as Relative Strength Index (RSI), Average True Range and Fibonacci Retracement can help you discover important points in the market. With line tools and rectangles, you can also pull out important prices where you can invest some of your money in anticipation of a bull run.
6. Turn off external voices
With many comments and analyzes made by various investors, pundits and crypto-influencers, it can be challenging to stay cool in a nose-diving market. However, your decisions during this time can significantly affect your long-term success. Therefore, be careful about who you listen to and what you read, as they can confuse you into making the wrong decisions.
To maintain a balanced mind, we recommend that you do not check asset prices daily. Of course, this is easier said than done. But constantly checking cryptocurrency rates puts you in a position to make emotional decisions instead of logical ones.
Always remind yourself why you invested in crypto. Never forget that tough times never last. You need to learn to keep a clear head for long-term success.
Don’t forget to spend some time training, learning new skills, and maybe learning new crypto trading strategies.
The future seems bright
There is no doubt that massive risk usually accompanies bear markets. However, we can not argue that they form a good basis for your success in the next bull run if you handle them well – a process that requires strategic planning and patience.
Nobody likes to lose money. Instead of losing and making the wrong decisions in a bear market, you can take steps to manage your portfolio well.
Despite the volatility in the crypto market, cryptocurrencies are moving towards widespread use. As a result, it is expected that the number of job vacancies in the blockchain industry will continue to expand in the years to come. This leads us to believe that crypto is here to stay.
This is not financial advice. If you are interested in any type of investment, you should consult a licensed financial advisor who can give you the best advice based on your needs and willingness to take risks.
