Trading and investing during down markets may be extremely difficult for novices. But there are ways to survive a crypto bear market.
No market can keep going up forever, but bear markets can certainly be a good time to buy. In fact, crypto market dips may be an excellent opportunity to reflect on past errors, educate yourself on crypto, and prepare for the inevitable recovery. For those who want to learn how to keep their heads above water and ride out the storm of a bear market, this article will provide you with basic details and five valuable pointers.
What is a Bear Market?
A bear market: now what exactly is one? In conventional financial jargon, a bear market occurs whenever the stock market has a lengthy drop, usually extending for two months or more. The term “bear market” describes a market that has dropped by 20% or more from its most recent peak. In many instances, a bear market will coincide with a broader economic slump, such as a recession.
However, bear markets are not limited to the share market or the Sensex and Nifty; they may affect any asset. Like crypto.
In what ways can this affect your financial planning? Investors may feel both fear and opportunity at this time. Many investors may sell lower in response to bad news, figuring that some loss is better than a complete loss. However, if you can maintain calm, use strategic thinking, and purchase when prices drop, you may place yourself in a position to benefit from the market’s eventual return to normalcy, which might result in even more significant gains.
5 Top Tips and Tricks to Navigate in a Bear Market
If you’re trying to make your way through the market in times of extreme volatility and decline, here are five tips and tricks to navigate in a bear market to keep in mind.
#1. Break the inertia and stop the bleeding
Bear markets are frustrating because we don’t sell soon enough, and assets that seem safe aren’t. Usually, people freeze and assume it’s too late to act. Selling anything will disrupt that attitude. Stop seeking excuses not to sell. Maybe it’s the wrong moment, but it’s incredible how this shifts your perspective and allows you to act. Bear markets punish inertia.
#2. Portfolio diversification
Diversified investors may be less affected by weak markets in one asset. Bear markets cause asset values to fall, although not always by the same amount. Stick to good projects — which in crypto’s case are often just the top 4–5 coins by market cap, or even diversify to other assets. This technique guarantees an investor a mix of winning and losing during a bear run. Thus, portfolio losses are minimized.
#3. Don’t overtrade
This recommendation relates to earlier risk-mitigation approaches. Nothing is absolute in crypto markets. Even if you did everything right and found an excellent purchasing or selling opportunity, something unexpected can happen. Don’t lay all your eggs in one basket. If you can’t avoid making massive transactions, use cost averaging to invest at regular intervals regardless of price.
#4. Be calm
Bear markets are exhausting. They often conclude with a panic-driven plunge, according to conventional wisdom. Bear markets finish whimpering, not crashing. They are unpleasant because they last longer than expected, and many quit.
So just wait.
It’s easy to want to trust the bear market, but remain suspicious.
#5. Go blind
Bear markets entice investors to flee and never look back. Will and endurance are challenged. The crypto bear market won’t persist forever, as history shows. Since 1928, Hartford Funds has reported 26 bear markets. Each bear market was succeeded by a bull market that made up for any losses. The same has happened in crypto — in 2017, and in 2013.
It’s vital to ignore the current slump, particularly when preparing for retirement. Bull markets will eventually outperform down markets.
Conclusion
Cryptocurrency investments come with unique challenges, given their volatile market environment. If there’s one thing you take away from this post, let it be this: investing is a marathon, not a sprint. The hardships of bear markets are real, but maybe you’ll be better prepared to deal with them now that you’ve read this article.
Mercuryo, a renowned finance platform, released a survey in May 2022 indicating that cryptocurrency users believe that initiatives that support “money transfers” and “retail crypto payments” are the most likely to endure even the most challenging bear market circumstances. While we don’t intend to give you any investment advice, Information like this and others may be helpful to investors looking for promising investment possibilities during downward trends.
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.
