Crypto is facing another low. The current situation in the crypto market makes leaders question when the cryptocurrencies like Bitcoin will recover or if the current situation will turn into a long-term decline? From an all-time high, the market for Bitcoins is down by 40%. The lows in the crypto market are hitting the ground bottom, and it is only clear that there is an onset of a prolonged bear market.
Though the lessons from past bear markets only conclude:
- Bitcoin will return as it has recovered ferociously in the past.
- Patience is the key and keeping a long-term outlook for things to get better.
The crypto market has this nature to pivot in a direction (multi-month prices pullback) that can easily wipe out the fortunes of new millionaires. Currently, Bitcoin price is peddling in the waves of lows and is over 50% away from its $69,000 all-time high. Even the altcoins have faced worse. Many are down with over 60% in the last two months. The weak closedown of the 2021 Crypto market directs that bitcoin prices are not ready to take a surge.
The crypto market has set the bar shockingly low for entrepreneurs to raise money, and this is dangerous for everyone involved. Nick Tomaino
Some investors are already expecting another "bitcoin winter" – that is, a period where prices fall and don't recover for a year or more. We encountered the last bitcoin winter in late 2017 and the middle of 2019, where bitcoin dropped from around $20,000 to below $4,000.
What Is A Crypto Bear Market?
A bear market is a part of an investment cycle with prolonged price dips. These can be highly stressful for investors, but it is essential not to panic and focus on the long-term investment opportunities. An over 20% drop comes under a bear market in the stock market. But that may not hold for the cryptocurrency market that often witnesses a price drop and surge of 20% and more. The volatile nature of the crypto market is like this. For a consistent dip in crypto prices, it is safe to say, a bear market is coming!
Other is the bull market, opposite of the crypto market when prices are rising incredibly and investors' confidence is sky touching.
Prolonged price dips are a matter of concern for investors whose years of fortune are at stake.
The current nearing bear market only directs that the investment strategists need to sit together and come up with an actionable plan instead of buying the lowest dips.
5 Strategies (Plus 1) To Survice Crypto Bear Market
To protect from the upcoming bear market, these are a few strategies investors can adopt to sail through another crypto winter and retain more value in the portfolio.
1. Minimize Exposure To Volatile Altcoins
Once the market sees a continuous downturn, it is best to re-evaluate the current positions and offerings. The prime agenda should minimize exposure to highly volatile altcoins.
Many projects sail through the crypto market in the name of a new offering with no make-hold such as meme coins, NFTs, or rebase projects like Wonderland (TIME). Here, most token holders are relatively new in the market with no strong market knowledge too.
The long-term investment holders with the user base of established projects are aware of all the crypto seasons. If things look gimmicky with flashy marketing tactics and huge promises, investors should step ahead in cutting off the ties. The best practice is to reconsider the projects by opening your GitHub account and finding the level of activity and the number of developers dedicated to building out the protocol.
Instead, investors can look for stablecoins to put the drawn fund into, as stable coins are promising for buying future dips.
2. Dollar Cost Averaging
There is a reason why the bitcoins face an aggressive dollar cost averaging community. They rightly understand work and scarcity that cannot be matched.
Dollar-Cost Averaging (DCA) is an investment strategy in which investors divide the total amount across periodic purchases to buy a target asset. It minimizes the volatility impact on the overall purchase. It also aims to banish creating the mistake of making one lump-sum investment that is poorly timed concerning asset pricing.
DCA strategy is a brilliant way to increase the exposure of sound projects over time in the crypto market. Dollar cost averaging should always be targeted for projects that can set a proper roadmap and have an engaged community and an active development cycle. Just like it's impossible to know the bottom of a bear market, it is impossible to find which cryptocurrency out of 17000+ will revive sooner.
The best bet is to use DCA for a range of different crypto assets. This may chunk your trade sizes into smaller ones, but it will guard you against facing overall risks. Of course, it is a time-consuming, deep research diving scenario to explore potential crypto assets. But all it does is diversify your investments across a variety of crypto assets.
To find the crypto assets best suited, you may need to do your research based on:
- Previous all-time high: For a brief understanding of the asset's potential.
- Past Performances: You can use tools like TradingView to figure out the crypto asset's past performance and how the market accepted it.
- Upcoming announcements: Any significant roadmap development or new offerings of the project.
A clear and long-term perspective is well paid in the highly volatile crypto market. It has always been viewed as a digital goldmine. Therefore, believe in its peaks and valleys and consider DCA to dust off the pitfalls.
3. Consider Staking
With the upcoming bear market making waves of threat for investors, it is best to look for ways to cushion your portfolio. The dwindling asset value and the unpredictable scenarios should not make you insecure instead, brace up to face it with smart plan. One such to increase your long-term profits, and security is staking.
Staking locks your potential crypto coin on the blockchain with a small interval to yield a passive income. It is possibly the simplest yet most powerful way to boost the long-term portfolio. It, at some level, wards off the stress of looking at daily price fluctuations and venting over.
The market currently has a pool of staking options, even for Ethereum. Ether holders can progressively stake their tokens on the blockchain for Eth2. Though it's important to note that the rewards for Staking can't be claimed until Eth2 is fully launched.
Other possible staking options are gaming protocols like Axie Infinity and NFT marketplaces like LooksRare. All does staking needs is choosing a good project to stake and forgetting it.
4. Research To Find Growing Projects
It is essential to fit in the crypto market with projects that help token holders earn via Staking, liquid Staking, borrowing, and airdrops. When the market turns bearish, these long-term projects with a promising ecosystem serve as a safe bet.
Staking, as discussed, offers huge perks and even the simplest to execute. Other projects to consider are token launchpads, NFT marketplaces, and protocols known for offering airdrops to community members.
Understand the crypto market is where managing risk is crucial. To keep up with the down pace of the current crypto market it is imperative to narrow down the potential projects and put your funds there. Even from a ferocious bear market, you can end up gaining something. Expect a bear market could be the calling to manage the risks and harness future unfoldings.
5. Invest Time For Yourself
In Crypto's down market where things are nearly out of control, a potential investor can instead dive in vain or make it the most for themselves. It is a perfect opportunity to look for new avenues and create future wealth.
Whether the learning is to take a course, learn about new NFT marketplaces, or learn deeper about various market sectors, this time could be the time you ever wanted. Remember, time spent learning is never wasted, whether for cryptocurrency or individual investments in particular. You can consider the bear market trend a fleeting scenario for a bright and increased crypto market. Get your coins staked, make your crypto assets annual returns around 5-10%, solidify your overall network security, and pay steady returns.
Pro Tip: Don't Panic!
It may seem like a no-brainer, but all investors fall prey to this. It is a given that managing emotions during a bear market are uncontrollable, but the resilience it offers is what you need. Renowned American economist Benjamin Graham once said,
"Individuals who cannot master their emotions are ill-suited to profit from the investment process.
Prevent this time from falling for snap judgments and dropping your motivation. Having a mindful actionable strategy to invest in trading needs to seal through future investments.
A crypto market bearing double-digit losses and crumbling down is difficult to witness as an investor. When the market turns widely volatile, it is depressing to be on the wrong side of the crypto market trading. But that doesn't mean you need to settle there gently and watch out for your portfolio's plummeting every day. This time is not about stressing out but making the most of this downturn opportunity to broaden your perspective.
It is time to take action and bring out the strategic measures to conquer this battle with more resilience. Have a breakdown of your funds to seek profits, sort capital in reserve for crashes, and calm your mind when the bear market hits. Be prepared when the prices turn back to hikes, and then you will have a portfolio worth cherishing.
True, the bear market could be a daunting time for any cryptocurrency investor, but typically, they are sustained. The nature of any investment market is as such - everything that goes upwards faces downfalls too. But a down market can also offer opportunities to reorient the mistakes made and brace yourself for the time when the call comes back shining! Find ways like above to overcome with some profits. No matter the profits are less, but having something is better than nothing from this scneario when nothing is in your control.