How to get the most out of a downturn in the crypto market

Disclaimer: The Industry Talk section contains insights from crypto industry players and is not part of the editorial content of Cryptonews.com.

It is best to keep an eye on the long-term trend in a bear market. If you are too focused on the short term, you may be missing out on some opportunities that emerge from a broader perspective.

As with all bear markets, cryptocurrency prices are currently in a downward spiral. However, it is crucial to remember that markets move in cycles, and prices will fluctuate over time, not just the downside.

Some traders give in to RD & D (fear, uncertainty and doubt) and start panicking the sale of assets at a loss, which further affects prices. Still, this is not the best move to make in a bearish market.

Instead, one of the best ways to take advantage of a bear market is to take the time to expand your portfolio. It is a smart idea to diversify your investments, especially with a focus on allocating funds to projects that show robust long-term growth prospects.

But before you start diversifying your portfolio, it is important to consider the following:

Avoid RD&D and panic sales

Bear markets create the right environment for people to spread rumors. You will find lots of speculations, opinions and theories circulating around the web, especially during longer bearish phases. It is common for people to fall victim to these statements and opinions, which in turn can influence your decisions.

If you come across any news or statements regarding one or more assets in your wallet, take the time to review the authenticity of the source (and the claim). Although it sounds simple, it is not as easy to take control of your emotions during bear markets as people claim it is.

Remember that fear and greed are two of the most influential motivators, often forcing people to make quick decisions. And these decisions generally do not end well. Therefore, pay attention to market movements, plan your strategy, consider all aspects, and perform only then.

Focus on keeping solvent

Basically, you always want to be able to come back to shop another day. During bear markets, some investors are beginning to take huge risks to recover losses. It is quite common to fall into the mentality of “investing to recoup all losses in a trade.” But strategies can also backfire, and this is a time when disciplined risk management is most important for success.

If possible, stay away from gired (margin) trades. Relying on leveraged trading in falling markets usually entails a much higher risk of losing the entire investment. Most importantly, do not invest heavily in multiple long positions because a prolonged fall in prices can lead to them being wound up if you do not have surplus funds to provide security for any resulting margin calls.

Use DCA to buy more coins

One of the best ways to get the most out of bear markets is to choose dollar cost-averaging (DCA) strategy to resist the downward spiral. Although simple, this strategy can help you build a long-term portfolio of assets that were not previously affordable.

With DCA, you can continue to buy smaller amounts of assets over a period of time regardless of price changes. For example, instead of buying BTC worth $ 200 in the initial downturn in the bear market, you can spread your purchases to $ 50 weekly. You can even place limit orders to take advantage of falling prices. Timing the market is incredibly difficult, so this approach can help balance the total cost of a position, and improve your chances of getting involved at a good entry price in the long run.

Not only will this help you collect more tokens when everyone is busy selling, but it will also increase your chances of generating more income than investing all your money in a single trade.

Diversify your portfolio

Finally, a bear market provides the right opportunity to expand your portfolio. On the one hand, the prices of established cryptocurrencies continue to fall. And on the other hand, dozens of new projects are preparing for the next bull run.

While there is no guarantee that the assets you choose will reach all-time highs in the next bull run, you can ANIMALS (do your own research) to find projects and tokens that have a greater chance of performing well in the long run. You can use a mix of basic and technical analysis to better understand the project, its sustainability, roadmaps, short- and long-term goals and past deliveries.

Most investors often consider the price changes of assets before investing in them. However, to increase your chances of generating a positive return during a bear market, it is valuable to consider other indicators (such as project growth rate, network activity, total value locked, etc.). Experts claim, for example, that several medium to low-cap tokens such as Cardano (ADA) are witnessing an influx of user and development activity, suggesting that the original token is poised for a reversal of the upside in the future.

In the same way, it is also important to look at new and upcoming projects, especially those that address existing shortcomings in the blockchain ecosystem. Take the $ KLV token off KleverChain – a layer-1 blockchain designed to increase multichain DeFi as the market prepares for the transition to DeFi 2.0.

KleverChain has just rolled out its core network, with pre-built and ready-to-use smart contracts, which allow developers to build and distribute Dapps and protocols quickly and cost-effectively. Since the future of blockchain is multichain and DeFi 2.0 marks a new era for evolving technology, KleverChain and its $ KLV token are well positioned to grow as the market gets back on its feet.

Ultimately, bull and bear, boom and bust cycles play a role in almost every market, be it finance, housing or commodities, and the crypto market is no exception. Be patient, take the time to research, make informed decisions, and focus on expanding your portfolio with disciplined risk management to capture opportunities in both bearish and bullish markets.