Why should you invest in crypto during a bear market?

Investing in crypto is less about thriving in a bull market and more about entering a bear market. Bear markets create wealth-generating opportunities, while bull markets just create a lot of noise. Most investors enter crypto during a bull market, not realizing that the market’s highs and lows limit profit potential. Bear markets, on the other hand, create lower lows and higher lows in the pool, making it the right place for investors to enter the crypto market.

Here’s more on why bear markets favor investors and how to view markets as long-term opportunities instead of short-term gains.

Opportunity to create generational wealth?

The one question every investor asks is: is it safe to invest in a bear market, and the short answer is yes. This does not mean that you should blindly put your money in any coin. In fact, it is more about following time-tested investment disciplines along with risk and portfolio management strategies. Markets cannot be timed. But with some basic investment strategies and technical knowledge, one can make the most of a bear market.

Dollar cost averaging (DCA) is one of the good approaches to follow in a bear market. DCA is when an investor consistently invests money in nearly equal amounts over time. This approach helps balance the purchase price over time. It prevents one from investing all their money in crypto and avoids the chance of big losses. This strategy encourages diligent saving by increasing the portfolio balance even when the crypto falls.

Another approach is through portfolio diversification. Diversification in this context refers to the crypto portfolio’s exposure to DeFi ecosystems. Investing is not limited to crypto spot markets. There are DeFi ecosystems that offer returns on multiple cryptocurrencies. It is also known as yield farming. For example, investors can deposit their ETH in the DeFi protocol Aave and enjoy fixed returns on their holdings.

Bear markets put all investors to the test. Although these times are tough to bear, history indicates that the market is likely to recover quickly. And if one invests for the long term, bear markets will be remembered for the wealth gained along the way.

The healthy side of a bear market

While bear markets are usually painful for people, they don’t stop development from happening. For example, the last bear market was harsh, but new ETH addresses did not decrease significantly. It was only a 12% reduction. Furthermore, Arbitrum’s, which is a layer 2 blockchain, witnessed the daily transactions on the chain rise. This has been the case since the mega bear market of 2017 that gave birth to today’s best-performing DeFi protocols.

Bear markets also allow builders to focus their efforts on building their products into a better version, as there is less noise from projects with poor fundamentals trying to drag down the good ones. Long-term thinking, hard work and planning have more room to reign in a lean bear market. Likewise, bear markets purge the market of weaker projects that often act as deadweights, distractions, or outright frauds. It brings out real builders and projects that create something of great use.

Umami, for example, is a utility project being developed during this bear market. It is a DeFi protocol that provides strategy vaults that create long-term, risk-adjusted returns on core cryptoassets such as $USDC, $BTC and $ETH. Exeno is another example of a project that offers tools through its crypto trading platform. The platform is an online marketplace that offers a diverse range of products by allowing customers to pay in crypto. The platform is powered by its native exeno coin (EXN) which will be available through an IEO in mid-September that investors can acquire at a discounted price.

Bear Markets are the Gateway to Bull Market Fortunes

Bear markets present more opportunities than bull markets, and only those who see them through the lens of a disciplined investor can take advantage. Many factors come into play when analyzing the possibilities. It is a skill that can be learned by understanding the fundamentals of investing and crypto fundamentals. Bear markets are certainly important not only for investing but also for weeding out scams and bad projects. It brings actual developers and projects into the spotlight, giving the crypto industry much-deserved recognition. In other words, it is the only gateway to the fortunes of the bull market

This article is sponsored by Venture369