Tips for Surviving the Bitcoin Bear Market – Bitcoin Magazine
This is an opinion piece by Boomer, a longtime and active member of the Financial Independence/Early Retirement (FIRE) movement.
Deep down we all knew this was going to happen. Bear markets suck, and they’re especially bad if it’s your first. Every bear market is different and there will always be people out there who will tell you the sky is falling. Please don’t be one of those people. I know price action has been a bit better in recent weeks, but while we may not be in a (cough cough) recession (cough cough), things are still pretty tough out there. Personally, I have no problem seeing bitcoin bounce between $20,000 and $25,000 for a while longer, but I know how scary those big red lights can be if you haven’t experienced them before. If you bought your first bets in the fall of 2021 when things looked like we were headed for $100,000, you’re probably feeling pretty defeated right now. I understand; it’s a terrible feeling. This may be my first bitcoin bear market, but I was around for the stock market madness of 2007-2009 – the last time it felt like the world was ending – and it was no fun. There are a ton of self-help articles out there that can guide you through the turbulence of stock market downturns, and I’ve found that most of the advice translates well to bitcoin. Here are a handful of tips that have helped me in the past.
Of course, if the losses are really that affects you, please don’t be ashamed to reach out for real help. There are people out there who specialize in this. Remember that this is in no way financial advice.
Speak out
The bear market in 2022 takes no prisoners. No one seems to be safe from this one, and it’s not just bitcoin this time. Pretty much everyone feels the pain. To make matters worse, inflation affects us all. Reach out to a friend who is interested in investing and try to strike up a conversation about it over a summery cocktail. People have a hard time realizing that they are not the only ones going through hard times, and too often we hide behind fake smiles when we go through them. Chances are your friend feels the same way you do, even if they don’t post about it on social media. I’ve noticed that when I give someone a pep talk, it resonates more with me than when I give the same pep talk to myself.
“If you want to go fast, go alone, but if you want to go far, go together.”
As a bit of a bonus, why not take the opportunity to try orange pilling your friend? People are realizing that things are weird out there, and they’re looking for new options, so they might be more receptive to the pitch than they would have been a few months ago. It really is a great time to get people on board.
Reevaluate your goals
Remember that risk tolerance is personal. Are you in bitcoin for the long term? Many say they are, but really just want quick wins. Have your goals changed? If your long-term mission is still intact, you should be able to avoid this volatility, but adjust your expectations if you struggle. Be honest with yourself and remember that there is no shame in selling some of your possessions if worrying about them keeps you awake at night. It’s better to take a loss now, learn from your mistakes and move on than to completely destroy your spirit. Reassess your priorities if you have lost more than you can afford to lose. If you have to sell at a loss, you should probably just do it and move on. But don’t give up! Reducing your exposure by reducing your stack size might not be a bad idea. I saw people give up investing after the global financial crisis because their goals and risk tolerance were not properly aligned. When they got steamed, they gave up completely. Don’t let it happen to you.
Bear markets offer opportunity if you can handle it, but don’t be too hard on yourself if you can’t. I never thought I’d see bitcoin below $20,000 again, so I understand if you feel scared if you bought near the top. If you can stomach it, take the opportunity to pick up some bet on the cheap. Dollar cost average if you can and use your position size to manage your risk. Reduce the size of your regular purchases if volatility gets to you. I generally avoid rebalancing during bear markets, but if you have investments other than bitcoin, it can be cathartic to sell some of your losers to buy something even more battered so you can start fresh. However, remember: I am not giving financial advice.
Learn from the greats
Seek out the wisdom of investing legends. While I don’t necessarily agree with their investment strategies for 2022, guys like Charlie Munger and Warren Buffett have gone through decades of market cycles and there is a lot of value in channeling their experiences. These dinosaurs have seen many bear markets in their day and have a lot to say about them. Try searching for “bear market quotes” from these guys. There are many important lessons to be learned when the markets fall, and most of them cannot be learned through a textbook.
This is one of my favorite quotes to get me through a bear market:
“The price is what you pay. Value is what you get.” – Warren Buffett
Keep track of your mistakes
If you’re a dollar cost averaging person, you can skip this one, but for those of you who enjoy trying to pick bottoms or trades, this one is for you.
I’ve kept a trading journal for most of my investing career and I always find it helpful to go back and read. I like to keep track of a few things in my journal other than price and quantity, like how I’m feeling. There are no rules for what you should write in your own journal, just be consistent. Over the past few weeks, I’ve been going through my journal to see what I was thinking when I made certain decisions. There were some mistakes, but most of my purchases made sense when I made them. I’m primarily an index investor, but over the years I’ve jumped into some tech stocks at the wrong time. The majority of my mistakes (apart from buying a few altcoins that shall remain nameless) were on the sell side: Most of my mistakes consisted of selling too early. Everyone thinks they are a genius in a bull market, and mistakes are usually brushed over with green paint. Bear markets are much less forgiving. It is not enough to just keep a diary. Be sure to go back and read it once in a while. It is surprising how often we repeat mistakes.
Build something… Anything
I know it doesn’t feel like it, but a great opportunity is presented to us right now. Bear markets have a way of separating signal from noise, so if you’re still reading Bitcoin articles, listening to podcasts, stacking bets, and building a Bitcoin community network, you’re most likely “a real one.” You are weathering this bear market and you are going to be that much stronger when the storm passes. You focus your energy and learning, but these are also the days you should take chances by building something. Since there aren’t that many people painting right now, the experts will notice the hustle and bustle. Do not hesitate to contact these people for help. I have found the Bitcoin community to be incredibly open and helpful. Chances are, the podcaster you listen to every day will happily give you some advice. Maybe it’s as simple as buying a used S9 ASIC miner and learning how bitcoin mining works, or maybe you can start your own podcast or Tik Tok channel about something in Bitcoin that interests you. Maybe it’s writing articles like this one about how you can help the Bitcoin community grow and prosper. It can be as simple as setting up a monthly Bitcoin meeting. It’s still early days and this is the time to post your proof of work. Be yourself and get out there; your voice matters. Get ready for when the market turns because we all know it will eventually. When it does, you could be one of the people that the new class of Bitcoiners look to for help.
Bonus: Get out
It is summer. Get out there and enjoy it. Turn off all your financial alerts on your phone. If you are used to checking your trading account balance every day, why not cut down to twice a week? If you absolutely must, designate a friend to text you really hits the fan. Hint: It probably won’t…and even if it did, what would you actually do with it?
One last thing that I have to repeat: If you really feel down, don’t be ashamed to ask for help. There are resources out there. I am by no means a mental health professional, but if you ever need a simple message of encouragement, send me my DMs Twitter are open. WGMI.
This is a guest post by Boomer. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc. or Bitcoin Magazine.
